Signaling in the Labor Market: New Evidence on Layoffs and Plant Closings

Núria Rodriguez-Planas

No 1009, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In my asymmetric-information model of layoffs, high-productivity workers are more likely to be recalled to their former employer and may choose to remain unemployed rather than to accept a low-wage job. In this case, unemployment can serve as a signal of productivity, and duration of unemployment may be positively related to post-laid-off wages even among workers who are not recalled. In contrast, because workers whose plant closed cannot be recalled, longer unemployment for them should not have a positive signaling benefit. Analysis of the data from the January 1988-2000 Displaced Workers Supplements to the Current Population Survey reveals that the wage/unemployment duration relation differs between laid-off workers and workers displaced through plant closings in the predicted way, and finds evidence consistent with asymmetric information in the U.S. labor market.

Keywords: unemployment; signaling; laid-off workers; wages (search for similar items in EconPapers)
JEL-codes: J30 J60 (search for similar items in EconPapers)
Pages: 61 pages
Date: 2004-02
New Economics Papers: this item is included in nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published - published as 'Playing Hard to Get: Theory and Evidence on Layoffs, Recalls, and Unemployment' in: Research in Labor Economics, 2013, 38, 211 - 258

Downloads: (external link)
https://docs.iza.org/dp1009.pdf (application/pdf)

Related works:
Working Paper: Signaling in The Labor Market: New Evidence On Layoffs, and Plant Closings (2003)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp1009

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().