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Displacement, Asymmetric Information, and HeterogeneousHuman Capital

  • Luojia Hu
  • Christopher Taber

Gibbons and Katz's asymmetric information model of the labormarket predicts that wage losses following displacement should belarger for layoffs than for plant closings. This was borne out intheir empirical work. In this article, we examine how the differencein wage losses across plant closing and layoff varies with race andgender. We find that the basic prediction by Gibbons and Katz holdsonly for white males. We augment their asymmetric information modelwith heterogeneous human capital and show that this augmented modelcan match the data. (c) 2011 by The University of Chicago. Allrights reserved.

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Article provided by University of Chicago Press in its journal Journal of Labor Economics.

Volume (Year): 29 (2011)
Issue (Month): 1 (01)
Pages: 113-152

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Handle: RePEc:ucp:jlabec:v:29:y:2010:i:1:p:113-152
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  1. Akerlof, George A, 1976. "The Economics of Caste and of the Rat Race and Other Woeful Tales," The Quarterly Journal of Economics, MIT Press, vol. 90(4), pages 599-617, November.
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  9. Coate, S. & Loury, G.C., 1992. "Will Affirmative Action Policies Eliminate Negative Stereotypes?," Papers 3, Boston University - Department of Economics.
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  12. Dennis J. Aigner & Glen G. Cain, 1977. "Statistical theories of discrimination in labor markets," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 30(2), pages 175-187, January.
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  14. Stevens, Ann Huff, 1997. "Persistent Effects of Job Displacement: The Importance of Multiple Job Losses," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages 165-88, January.
  15. Becker, Gary S., 1971. "The Economics of Discrimination," University of Chicago Press Economics Books, University of Chicago Press, edition 2, number 9780226041162.
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