Waiting for Work
George A. Akerlof
University of California, Berkeley; National Bureau of Economic Research (NBER)
Andrew K. Rose
University of California - Haas School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)
Janet L. Yellen
University of California, Berkeley - Economic Analysis & Policy Group
NBER Working Paper No. w3385
This paper explains upward job mobility and observed patterns of unemployment by skill as an economy recovers from a recession. Skilled unemployment is due to rational waiting by workers looking for long-term jobs when there is a "lock-in" effect. Lock-in occurs if the conditions in the labor market when a worker first accepts a job have a persistent effect on wages. Using longitudinal data, we provide empirical evidence of the cyclical pattern of wages predicted by the theory and also of lock-in.
Number of Pages in PDF File: 42
Date posted: July 4, 2004
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