Unemployment Through Learning from Experience

Steve Alpern and Dennis J. Snower
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Steve Alpern: London School of Economics
Dennis J. Snower: University of London

Chapter 3 in Issues in Contemporary Economics, 1991, pp 42-74 from Palgrave Macmillan

Abstract: Abstract This paper analyses how workers’ wage claims can serve as a learning tool. We argue that when workers have some market power and face substantial uncertainty in the labour market, it may be in their interests to formulate their wage claims with a view to the information thereby revealed, in order to make more informed wage claims in the future. This learning behaviour can have an important by-product: unemployment. Our analysis shows how the process of information acquisition through wage claims generates: (a) rates of youth unemployment and long-term unemployment that are higher; (b) dismissal probabilities for incumbent workers that are lower than would otherwise be the case.

Keywords: Unemployment Rate; Learn Model; Young Worker; Transfer Payment; Uncertainty Interval (search for similar items in EconPapers)
Date: 1991
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Persistent link: https://EconPapers.repec.org/RePEc:pal:intecp:978-1-349-11576-1_3

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DOI: 10.1007/978-1-349-11576-1_3

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