Unemployment Duration under Flexible Information Acquisition

47 Pages Posted: 18 Nov 2020 Last revised: 17 Aug 2023

See all articles by Jeong Ho (John) Kim

Jeong Ho (John) Kim

Florida State University - Department of Finance

Kyungmin Kim

Emory University

Marilyn Pease

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy

Date Written: August 15, 2023

Abstract

We consider a worker's job search problem in which firms arrive sequentially, observe the worker's unemployment duration, and conduct an interview to learn about her unobservable productivity. Firms engage in fully flexible information acquisition subject to a uniformly posterior-separable cost function. We provide a closed-form characterization of equilibrium job search dynamics and demonstrate that endogenous information amplifies the "stigma" effect of long unemployment duration relative to exogenous information. We also show that lowering firms' information-acquisition costs has ambiguous implications for a worker's unemployment duration.

Keywords: Duration Dependence; Job Search; Information Acquisition; Posterior-Separable Information Costs

JEL Classification: D82, D83, J23

Suggested Citation

Kim, Jeong Ho and Kim, Kyungmin and Pease, Marilyn, Unemployment Duration under Flexible Information Acquisition (August 15, 2023). Available at SSRN: https://ssrn.com/abstract=3703236 or http://dx.doi.org/10.2139/ssrn.3703236

Jeong Ho Kim (Contact Author)

Florida State University - Department of Finance ( email )

Tallahassee, FL 32306-1042
United States

Kyungmin Kim

Emory University ( email )

201 Dowman Drive
Atlanta, GA 30322
United States

HOME PAGE: http://https://sites.google.com/site/kyungminteddykim/Home

Marilyn Pease

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy ( email )

Bloomington, IN 47405
United States

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