A Puzzling Aspect of the Effect of Advance Notice on Unemployment

INDUSTRIAL AND LABOR RELATIONS REVIEW, January 1997

Posted: 16 Oct 1996

See all articles by John T. Addison

John T. Addison

University of South Carolina - Moore School of Business - Department of Economics; IZA Institute of Labor Economics

McKinley L. Blackburn

University of South Carolina - Darla Moore School of Business

Abstract

Displaced workers with generous periods of advance notice are more likely than their non-notified counterparts to avoid post-displacement unemployment altogether, but once unemployed, they tend to escape from unemployment much more slowly. The authors, using data from the five-year retrospective 1988 and 1990 Displaced Worker Surveys, examine three potential explanations for this puzzle: delaying behavior induced by the receipt of unemployment insurance, non-random distribution of notice to workers, and previous studies' failure to appropriately incorporate the pre-displacement search time of notified workers. This analysis supports the third explanation. After allowing for less intense search prior to displacement than following displacement, the authors find that the pattern of escape rates for otherwise observationally equivalent workers does not differ by notification status.

JEL Classification: J6

Suggested Citation

Addison, John T. and Blackburn, McKinley L., A Puzzling Aspect of the Effect of Advance Notice on Unemployment. INDUSTRIAL AND LABOR RELATIONS REVIEW, January 1997. Available at SSRN: https://ssrn.com/abstract=3410

John T. Addison

University of South Carolina - Moore School of Business - Department of Economics ( email )

The Francis M. Hipp Building
1705 College Street
Columbia, SC 29208
United States
803-777-7400 (Phone)
803-777-6876 (Fax)

HOME PAGE: http://mooreschool.sc.edu/moore/economics/profiles/addison.htm

IZA Institute of Labor Economics

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

McKinley L. Blackburn (Contact Author)

University of South Carolina - Darla Moore School of Business ( email )

1705 College St
Francis M. Hipp Building
Columbia, SC 29208
United States
803-777-4931 (Phone)
803-777-6876 (Fax)

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