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Increasing Employment Through the Partial Release of Information

Surajeet Chakravarty, Todd Kaplan and Luke Lindsay
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Surajeet Chakravarty: Department of Economics, University of Exeter

No 2001, Discussion Papers from University of Exeter, Department of Economics

Abstract: We investigate whether an agency can increase employment by strategically coarsening information about workers' skills and abilities to employers. Theoretically, we find that such an increase is possible and a range of employment levels can be supported in equilibrium. We test this possibility using laboratory experiments under three conditions: full information, coarse and verifiable information, and coarse but not verifiable information. We find that, compared with full information, both treatments with coarse information increase employment at the expense of the employers' profits but not the highest theoretically achievable levels. We also find verifiability affects several aspects of behavior.

Keywords: job placements; ratings; lab experiments; institutions; information design; unemployment (search for similar items in EconPapers)
JEL-codes: C9 D82 J6 (search for similar items in EconPapers)
Date: 2020, Revised 2023
New Economics Papers: this item is included in nep-exp and nep-lab
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