Recall and Unemployment

Shigeru Fujita and Giuseppe Moscarini

No 196, 2016 Meeting Papers from Society for Economic Dynamics

Abstract: Using data from the Survey of Income and Program Participation (SIPP) covering 1990-2013, we document that a surprisingly large number of workers return to their previous employer after a jobless spell, and experience very different unemployment and employment outcomes than job switchers. Furthermore, the probability of recall is much less cyclical and volatile than the probability of finding a new job. Building on these facts, we introduce a recall option in a canonical search-and-matching business- cycle model of the labor market. The recall option is lost when the unemployed worker accepts a new job. New matches are mediated by a matching function, which brings together costly vacancy postings and costly search effort by unemployed workers. In contrast, recalls are frictionless and free, and triggered both by aggregate and job-specific shocks. A quantitative version of the model captures well our cross-sectional and cyclical facts through selection of recalled matches. Model analysis shows that recall and search effort significantly amplify the cyclical volatility of job finding and separation rates.

Date: 2016
New Economics Papers: this item is included in nep-dge and nep-mac
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Recall and Unemployment (2017)
Working Paper: Recall and Unemployment (2017)
Working Paper: Recall and unemployment (2013)
Working Paper: Recall and Unemployment (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed016:196

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