Unemployment through `Learning from Experience'

Steve Alpern and Dennis Snower

No 483, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper shows that when workers have some market power and face substantial uncertainty concerning their productivity, it may be in their interest to formulate their wage claims with a view to the information thereby revealed. This learning behaviour may in turn be responsible for unemployment. Our analysis shows how the process of information acquisition through wage claims generates a higher rate of youth unemployment and long-term unemployment and a lower probability of dismissal for incumbent workers than would otherwise be the case.

Keywords: Learning; Unemployment; Wage Information (search for similar items in EconPapers)
Date: 1990-11
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