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Search, Layoffs, and Reservation Wages

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  • Wright, Randall D

Abstract

The author analyzes job-search models with random layoffs in which employment opportunities are characterized by a wage and some measure of risk. Intuition suggests that a worker ought to demand a higher wage if he is to accept a job with a higher layoff rate, but this is not true in several models analyzed in the literature. The author demonstrates that assumptions about what happens immediately after a layoff and after a quit are critical in determining the relation between reservation wages and risk. Making these assumptions explicit clarifies the reasons why different models imply quite different predictions. Copyright 1987 by University of Chicago Press.

Suggested Citation

  • Wright, Randall D, 1987. "Search, Layoffs, and Reservation Wages," Journal of Labor Economics, University of Chicago Press, vol. 5(3), pages 354-365, July.
  • Handle: RePEc:ucp:jlabec:v:5:y:1987:i:3:p:354-65
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    Cited by:

    1. Kopp, Andreas, 1996. "Layoffs, job search and labour market pooling," Kiel Working Papers 729, Kiel Institute for the World Economy (IfW).
    2. Alexandron-Lavon, Anat & Epstein, Gil S. & Lindner Pomerantz, Renana, 2017. "The Effect of Ideological Positions on Job Market Interaction," GLO Discussion Paper Series 141, Global Labor Organization (GLO).
    3. repec:eee:jeborg:v:145:y:2018:i:c:p:261-274 is not listed on IDEAS
    4. Hahn, Volker, 2009. "Search, unemployment, and age," Journal of Economic Dynamics and Control, Elsevier, vol. 33(6), pages 1361-1378, June.
    5. Matteo Richiardi, 2003. "A Search Model of Unemployment and Firm Dynamics," LABORatorio R. Revelli Working Papers Series 30, LABORatorio R. Revelli, Centre for Employment Studies.
    6. Stefan Arent & Wolfgang Nagl, 2011. "The Price of Security: On the Causality and Impact of Lay-off Risks on Wages," ifo Working Paper Series 100, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    7. Bruce K. Fallick, 1988. "Job Search in More Than One Labor Market," UCLA Economics Working Papers 495, UCLA Department of Economics.

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