Job Search, Stigma Effect, and Escape Rate from Unemployment

Tara Vishwanath

Journal of Labor Economics, 1989, vol. 7, issue 4, 487-502

Abstract: This article formulates job search models, incorporating certain types of the "stigma" effect of unemployment. It is assumed that the probability of getting a job offer, given the unemployment individual contacts the firm, is influenced by the duration of unemployment and is justified in a signaling context. The optimal search is analyzed for one sector, as well as across several independent labor-market segments. It is shown that there are reasonably general conditions on the search environments, for which both the individual reservation wage and escape rate are negative-duration dependent, a fact observed in empirical studies. Copyright 1989 by University of Chicago Press.

Date: 1989
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