Asymmetric Information in the Labor Market: New Evidence on Layoffs, Recalls, and Unemployment

62 Pages Posted: 3 Sep 1999

See all articles by Núria Rodríguez-Planas

Núria Rodríguez-Planas

City University New York (CUNY), Queens College; IZA Institute of Labor Economics

Date Written: November 1998

Abstract

In the United States, many laid-off workers are recalled to their former employer. I develop an asymmetric information model of layoffs in which high productivity workers are more likely to be recalled and may choose to remain unemployed rather than accept a low-wage job. In this case, unemployment can serve as a signal of productivity, and unemployment duration may be positively related to post-laid-off wages even among workers who are not recalled. In contrast, since workers whose plant closed cannot be recalled, longer unemployment duration should not have a positive signaling benefit for such workers. Analysis of the data from January 1988-1992 Displaced Workers Supplements to the Current Population Survey reveals that the wage/unemployment duration relation differs between the two groups in the predicted way, and finds evidence consistent with asymmetric information in the U.S. labor market.

JEL Classification: J60, J30

Suggested Citation

Rodriguez-Planas, Nuria, Asymmetric Information in the Labor Market: New Evidence on Layoffs, Recalls, and Unemployment (November 1998). Available at SSRN: https://ssrn.com/abstract=158668 or http://dx.doi.org/10.2139/ssrn.158668

Nuria Rodriguez-Planas (Contact Author)

City University New York (CUNY), Queens College ( email )

65-30 Kissena Blvd
Flushing, NY 11367-1597
United States

HOME PAGE: http://https://sites.google.com/site/nuriarodriguezplanas/

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
179
Abstract Views
1,585
rank
185,854
PlumX Metrics