This paper is the first to present empirical evidence consistent with models of signaling through unemployment and to uncover a new stylized fact using the 1988–2006 Displaced Worker Supplement (DWS) of the Current Population Survey (CPS), namely that, among white-collar workers, post-displacement earnings fall less rapidly with unemployment spells for layoffs than for plant closings. Because high-productivity workers are more likely to be recalled than low-productivity ones, they may choose to signal their productivity though unemployment, in which case the duration of unemployment may be positively related to post-displacement wages. Identification is done using workers whose plant closed as they cannot be recalled, and no incentives to signal arise.
I especially thank Kevin Lang for his much-appreciated support and guidance. I also thank the extremely valuable suggestions and comments from three anonymous referees and the Editor, Solomon Polachek. Finally, George Akerlof, Eli Berman, William Dickens, Lawrence Katz, and Andrew Weiss have provided comments of earlier versions of this chapter. I acknowledge financial support from the Spanish ministry of Education and Science (grant MICINN2009-11857), the Generalitat de Catalunya (grant SGR2009-57), and Barcelona Graduate School of Economics.
Rodríguez-Planas, N. (2014), "Playing Hard to Get: Theory and Evidence on Layoffs, Recalls, and Unemployment", New Analyses of Worker Well-Being (Research in Labor Economics, Vol. 38), Emerald Group Publishing Limited, pp. 211-258. https://doi.org/10.1108/S0147-9121(2013)0000038007Download as .RIS
Emerald Group Publishing Limited
Copyright © 2013 by Emerald Group Publishing Limited