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Worker Identity, Employment Fluctuations and Stabilization Policy

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Listed:
  • Wolfgang Lechthaler
  • Dennis Snower

Abstract

This paper provides a model of “social hysteresis,” whereby long, deep recessions demotivate workers and thereby lead them to change their work ethic. In switching from a pro-work to an anti-work identity, their incentives to seek and retain work fall and consequently their employment chances fall. In this way, temporary recessions may come to have permanent effects on aggregate employment. We also show that these permanent effects, along with the underlying identity switches, can be avoided through stabilization policy. The size of the government expenditure multiplier can be shown to depend on the composition of identities in the workforce.

Suggested Citation

  • Wolfgang Lechthaler & Dennis Snower, 2013. "Worker Identity, Employment Fluctuations and Stabilization Policy," CESifo Working Paper Series 4271, CESifo.
  • Handle: RePEc:ces:ceswps:_4271
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Recession & work ethics
      by chris dillow in Stumbling and Mumbling on 2013-06-18 18:27:00

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    JEL classification:

    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy

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