Search Unemployment with Advance Notice

Author/Editor:

Pietro Garibaldi

Publication Date:

August 1, 1998

Electronic Access:

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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.

Series:

Working Paper No. 1998/119

Subject:

Job creation Labor Labor force Labor markets Unemployment Wages

English

Publication Date:

August 1, 1998

ISBN/ISSN:

9781451854145/1018-5941

Stock No:

WPIEA1191998

Pages:

42

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