Mass Layoffs and Unemployment

Andrew Caplin () and John Leahy ()

No 4766, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Mass layoffs give rise to groups of unemployed workers who possess similar characteristics and therefore may learn from one another's experience searching for a new job. Two factors lead them to be too selective in the job offers that they accept. The first is an information externality: searchers fail to take into account the value of their experience to others. The second is an incentive to free ride: each worker would like others to experiment and reveal information concerning productive jobs. Together these forces imply that in equilibrium the natural rate of unemployment is too high.

Date: 1994-06
Note: EFG
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Related works:
Working Paper: Mass Layoffs and Unemployment (1993)
Working Paper: Mass Layoffs and Unemployment (1993)
Journal Article: Mass layoffs and unemployment (2000)
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