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Job Security, Work Incentives and Unemployment

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  • Lindbeck, Assar
  • Snower, Dennis J

Abstract

This paper analyzes how firms can use job security as an incentive mechanism. The author examines how "macroeconomic job security" (measured by the reemployment probability) may affect productivity differently from "microeconomic job security" (measured by the probability of being retained). The authors describe the circumstances under which job security stimulates work effort. Then incumbent workers ("insiders") may have an opportunity to raise their wages above the market-clearing level without being replaced by unemployed workers ("outsiders"). In this context, involuntary unemployment can arise. Copyright 1988 by The editors of the Scandinavian Journal of Economics.

Suggested Citation

  • Lindbeck, Assar & Snower, Dennis J, 1988. " Job Security, Work Incentives and Unemployment," Scandinavian Journal of Economics, Wiley Blackwell, vol. 90(4), pages 453-474.
  • Handle: RePEc:bla:scandj:v:90:y:1988:i:4:p:453-74
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    References listed on IDEAS

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    1. R. M. Solow, 1974. "Intergenerational Equity and Exhaustible Resources," Review of Economic Studies, Oxford University Press, vol. 41(5), pages 29-45.
    2. Avinash Dixit & Peter Hammond & Michael Hoel, 1980. "On Hartwick's Rule for Regular Maximin Paths of Capital Accumulation and Resource Depletion," Review of Economic Studies, Oxford University Press, vol. 47(3), pages 551-556.
    3. Hartwick, John M, 1977. "Intergenerational Equity and the Investing of Rents from Exhaustible Resources," American Economic Review, American Economic Association, pages 972-974.
    4. Heal, Geoffrey M., 1993. "The optimal use of exhaustible resources," Handbook of Natural Resource and Energy Economics,in: A. V. Kneese† & J. L. Sweeney (ed.), Handbook of Natural Resource and Energy Economics, edition 1, volume 3, chapter 18, pages 855-880 Elsevier.
    5. Hartwick, John M, 1977. "Intergenerational Equity and the Investing of Rents from Exhaustible Resources," American Economic Review, American Economic Association, pages 972-974.
    6. Heal, Geoffrey M., 1993. "The optimal use of exhaustible resources," Handbook of Natural Resource and Energy Economics,in: A. V. Kneese† & J. L. Sweeney (ed.), Handbook of Natural Resource and Energy Economics, edition 1, volume 3, chapter 18, pages 855-880 Elsevier.
    7. Mitra, Tapan, 2002. "Intertemporal Equity and Efficient Allocation of Resources," Journal of Economic Theory, Elsevier, vol. 107(2), pages 356-376, December.
    8. Kirk Hamilton, 1995. "Sustainable development, the Hartwick rule and optimal growth," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, pages 393-411.
    9. Dasgupta, Swapan & Mitra, Tapan, 1983. "Intergenerational Equity and Efficient Allocation of Exhaustible Resources," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 24(1), pages 133-153, February.
    10. Withagen, Cees & B. Asheim, Geir, 1998. "Characterizing sustainability: The converse of Hartwick's rule," Journal of Economic Dynamics and Control, Elsevier, vol. 23(1), pages 159-165, September.
    11. Solow, Robert M, 1986. " On the Intergenerational Allocation of Natural Resources," Scandinavian Journal of Economics, Wiley Blackwell, pages 141-149.
    12. Mitra, Tapan, 1978. "Efficient growth with exhaustible resources in a neoclassical model," Journal of Economic Theory, Elsevier, vol. 17(1), pages 114-129, February.
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    Cited by:

    1. Lechthaler, Wolfgang & Merkl, Christian & Snower, Dennis J., 2010. "Monetary persistence and the labor market: A new perspective," Journal of Economic Dynamics and Control, Elsevier, vol. 34(5), pages 968-983, May.
    2. Pallage, Stephane & Zimmermann, Christian, 2005. "Heterogeneous labor markets and generosity towards the unemployed: an international perspective," Journal of Comparative Economics, Elsevier, pages 88-106.
    3. Dewit, Gerda & Leahy, Dermot & Montagna, Catia, 2012. "Employment Protection, Flexibility and Firms’ Strategic Location Decisions under Uncertainty," SIRE Discussion Papers 2012-24, Scottish Institute for Research in Economics (SIRE).
    4. Conefrey, Thomas & Smith, Richard, 2014. "On the Slide? Salary Scales for New Graduates 2004-2012," Economic Letters 01/EL/14, Central Bank of Ireland.
    5. Dennis J. Snower, 1998. "Causes of changing earnings inequality," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 69-133.
    6. Bergin, Adele & Kelly, Elish & McGuinness, Seamus, 2012. "Explaining Changes in Earnings and Labour Costs During the Recession," Papers EC9, Economic and Social Research Institute (ESRI).
    7. Bergin, Adele, 2009. "Job Mobility in Ireland," The Economic and Social Review, Economic and Social Studies, pages 15-47.
    8. Gerda Dewit & Dermot Leahy & Catia Montagna, 2003. "Employment Protection and Globalisation in Dynamic Oligopoly," Dundee Discussion Papers in Economics 137, Economic Studies, University of Dundee.
    9. Snower, Dennis J., 1999. "Inequality of Earnings," CEPR Discussion Papers 2321, C.E.P.R. Discussion Papers.
    10. Stéphane Pallage & Christian Zimmermann, 1999. "Assurance chômage et sociétés," Cahiers de recherche du Département des sciences économiques, UQAM 9904, Université du Québec à Montréal, Département des sciences économiques.
    11. Stephane Pallage & Christian Zimmermann, 1999. "Heterogeneous Labor Markets and the Generosity Towards the Unemployed: An International Perspective," Cahiers de recherche CREFE / CREFE Working Papers 88, CREFE, Université du Québec à Montréal.

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