Recall and Unemployment
75 Pages Posted: 26 Sep 2017
Date Written: 2017-06-29
We document in the Survey of Income and Program Participation covering 1990- 2013 that a surprisingly large share of workers return to their previous employer after a jobless spell and experience very different unemployment and employment outcomes than job switchers. The probability of recall is much less procyclical and volatile than the probability of finding a new employer. We add to a quantitative, and otherwise canonical, search-and-matching model of the labor market a recall option, which can be activated freely following aggregate and job-specific productivity shocks. Recall and search effort significantly amplify the cyclical volatility of new job-finding and separation probabilities.
Keywords: Recall, unemployment, duration, matching function, business cycles
JEL Classification: E24, E32, J64
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