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Search Unemployment with Advance Notice
Author:
Mr. Pietro Garibaldi
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Series:
IMF Working Papers
Volume/Issue:
Volume 1998: Issue 119
Language:
English
Publication Date:
01 Aug 1998
DOI:
https://doi.org/10.5089/9781451854145.001
ISBN:
9781451854145
ISSN:
1018-5941
Pages:
42
Keywords:
WP; turnover rate; equilibrium unemployment; unemployment flows; firing costs; search theory; good job; job-worker pair; job movement; job separation; job turnover; separation process; Labor force-employment flow; advance notice increases jobs to jobs movement; bad job; turnover statistics; worker turnover; Unemployment; Labor markets; Job creation; Wages; Labor force; North America; Europe; Northern Europe
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund