Job Search, Stigma Effect, and Escape Rate from Unemployment
This article formulates job search models, incorporating certain types of the "stigma" effect of unemployment. It is assumed that the probability of getting a job offer, given the unemployment individual contacts the firm, is influenced by the duration of unemployment and is justified in a signaling context. The optimal search is analyzed for one sector, as well as across several independent labor-market segments. It is shown that there are reasonably general conditions on the search environments, for which both the individual reservation wage and escape rate are negative-duration dependent, a fact observed in empirical studies. Copyright 1989 by University of Chicago Press.
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