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Search Unemployment with Advance Notice

Author

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  • Garibaldi, Pietro

Abstract

This paper proposes and solves a search unemployment model in which job separation requires mandatory notice. When jobs are subject to idiosyncratic uncertainty, firms would issue advance notice even with good business conditions. We show that such precautionary policy is not pursued if it entails sufficiently high productivity losses. If workers can search on the job, an increase in advance notice increases job-to-job movements, reduces unemployment flows, and has ambiguous effects on equilibrium unemployment. Results are consistent with the fact the North American and European labor markets, despite their differences in job security provisions, experience similar turnover rates and dissimilar unemployment flows.

Suggested Citation

  • Garibaldi, Pietro, 1999. "Search Unemployment with Advance Notice," CEPR Discussion Papers 2164, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:2164
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    Cited by:

    1. Tito Boeri & Pietro Garibaldi, "undated". "Shadow Activity and Unemployment in a Depressed Labor Market," Working Papers 177, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    2. Sunde, Uwe, 2002. "Unobserved Bilateral Search on the Labor Market: A Theory-Based Correction for a Common Flaw in Empirical Matching Studies," IZA Discussion Papers 520, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    Advance Notice; Search Theory; Unemployment Flows;

    JEL classification:

    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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