Structural Adjustment and Endogenous Worker Recall Probabilities

Arbeitspapier

In this paper we investigate the incentives of unemployed workers to wait for a recall when recall probabilities are endogenously determined by the waiting decisions of others. Because of a positive externality that arises when workers seek new employment, an excessive number of workers choose to wait for a recall, and structural adjustment is slow. We also find that a small reduction in the unemployment benefits, or introducing a small cash bonus for workers that get a new job, may have no e.ect on unemployment in some cases, while eradicating significant levels of unemployment in other cases. Our analysis suggests that the government may face a Samaritan's Dilemma if it can influence the recall probability of workers, and that multiple equilibria may exist in a game involving both workers and an unemployment-averse government. Furthermore, we explore a link to the war of attrition literature, showing that the Bulow and Klemperer (1999) one too many -result may not hold if there is uncertainty concerning when the game ends.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 708

Classification and Topics

• Classification: Wirtschaft
• Subject: structural adjustment ; unemployment ; recalls ; search ; war of attrition.

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Meland, Frode ; Torsvik, Gaute
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2002

Further information

• Handle: http://hdl.handle.net/10419/75962
• Last update: 10.03.2025, 11:42 AM CET