Search Unemployment with Advance Notice

August 1, 1998

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Format: Chicago

Pietro Garibaldi. Search Unemployment with Advance Notice, (USA: International Monetary Fund, 1998) accessed December 30, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Job creation, Labor, Labor force, Labor markets, Unemployment, Wages

Keywords: Advance notice increases jobs to jobs movement, Bad job, Equilibrium unemployment, Europe, Firing costs, Good job, Job creation, Job movement, Job separation, Job turnover, Job-worker pair, Labor force, Labor force-employment flow, Labor markets, North America, Northern Europe, Search theory, Separation process, Turnover rate, Turnover statistics, Unemployment, Unemployment flows, Wages, Worker turnover, WP

Publication Details

Pages:

42
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1998/119
Stock No:

WPIEA1191998
ISBN:

9781451854145
ISSN:

1018-5941

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