Optimal Strategies for Workers on Temporary Layoff
Barbara Ann White
University of Baltimore - School of Law
October 1, 1983
Economic Inquiry, Vol. 21, No. 4, pp. 520-544, October 1983
In this paper we analyze the worker's behavior when faced with job offers which include possible temporary layoff spells of varying (known) durations. We show that of the three strategies which can be optimal, two involve search in all or part of the layoffs. We also show that the duration of any particular spell plays no role in determining which strategy is optimal to pursue. And finally, we develop an index for evaluating jobs with different wage and layoff probabilities and show that the worker's reservation wage monotonically increases, decreases or remains constant during the course of a layoff.
Number of Pages in PDF File: 26
Keywords: temporary layoffs, workers, employees, optimal strategies, implicit contract literature, attachment assumption
JEL Classification: K19, K31, J63, J69working papers series
Date posted: August 21, 2009
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