WORKER TURNOVER AND UNEMPLOYMENT INSURANCE

Research output: Contribution to journalArticleResearch

Abstract

© (2018) by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association This article studies a competitive search model of the labor market with learning about match-specific productivity in which risk-averse workers factor present and future unemployment risks in their search decisions. We examine internally efficient equilibrium allocations in which match termination occurs only if the joint value of a worker–firm pair is negative. Internal efficiency poses a trade-off between present and future risks. Public insurance provision also affects this trade-off and, hence, worker turnover and job composition. In addition to unemployment benefits, the implementation of the planner's allocation requires a negative income tax and a 0 layoff tax.
Original languageEnglish
Pages (from-to)1837-1876
JournalInternational Economic Review
Volume59
DOIs
Publication statusPublished - 1 Nov 2018

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