Journal of Labor Economics Vol. 5 No. 3 1987
Search, Layoffs, and Reservation Wages
Abstract
I analyze job search models with random layoffs in which employment opportunities are characterized by a wage and some measure of risk. Intuition suggests that a worker ought to demand a higher wage if he is to accept a job with a higher layoff rate; but this is not true in several models analyzed in the literature. I demonstrate here that assumptions about what happens immediately after a layoff and after a quit are critical in determining the relation between reservation wages and risk. Making these assumptions explicit clarifies the reasons why different models imply quite different predictions.
- DOI
- 10.1086/298151
- Volume
- 5
- Issue
- 3
- Pages
- 354-365
- Language
- en
- Sources
- openalex crossref