A Theory of Quits and Layoffs with Efficient Turnover
Journal of Political Economy
1991
This paper answers the efficient-turnover literature's long silence regarding the quit-layoff distinction. Treating quits as worker-initiated separations and layoffs as firm-initiated separations, I establish that the existence of layoffs is compatible with optimizing workers and firms forming and dissolving employment matches to exploit all the gains from trade. The efficient-turnover approach is shown to be consistent with many empirical regularities that distinguish quits from layoffs. Structural implications of the model are tested on data from the PSID.
- DOI
- 10.1086/261738
- Volume
- 99 (1)
- Pages
- 1-29
- Language
- en
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- BibTeX
- Sources
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