Search Unemployment with Advance Notice

Pietro Garibaldi

No 1998/119, IMF Working Papers from International Monetary Fund

Abstract: This paper proposes and solves a search model in which job separation requires mandatory notice. When jobs are subject to idiosyncratic uncertainty, firms would issue advance notice even with good business conditions. We show that such precautionary policy is not pursued if it entails sufficiently high productivity losses. If workers can search on the job, an increase in advance notice increases job to job movements, reduces unemployment flows, and has ambiguous effects on unemployment. Results are consistent with the fact that North American and European labor markets, despite their differences in job security provisions, experience similar turnover rates and dissimilar unemployment flows.

Keywords: WP; turnover rate; equilibrium unemployment; unemployment flows; firing costs; search theory; good job; job-worker pair; job movement; job separation; job turnover; separation process; Labor force-employment flow; advance notice increases jobs to jobs movement; bad job; turnover statistics; worker turnover; Unemployment; Labor markets; Job creation; Wages; Labor force; North America; Europe; Northern Europe (search for similar items in EconPapers)
Pages: 42
Date: 1998-08-01
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: SEARCH UNEMPLOYMENT WITH ADVANCE NOTICE (2004)
Working Paper: Search Unemployment with Advance Notice (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:1998/119

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