Working Paper
Asymmetric information in the labor market: new evidence on layoffs, recalls, and unemployment
Rodriguez-Planas, Nuria (1999)
In the United States, many laid-off workers are recalled to their former employer. I develop an asymmetric information model of layoffs in which high-productivity workers are more likely to be recalled and may choose to remain unemployed rather than accept a low-wage job. In this case, unemployment can serve as a signal of productivity, and unemployment duration may be positively related to post-layoff wages even among workers who are not recalled. In contrast, since workers whose plant closed cannot be recalled, longer unemployment duration should not have a positive signaling benefit for ...
Finance and Economics Discussion Series , Paper 1999-09