Hostname: page-component-586b7cd67f-tf8b9 Total loading time: 0 Render date: 2024-11-22T15:39:09.079Z Has data issue: false hasContentIssue false

SEARCH UNEMPLOYMENT WITH ADVANCE NOTICE

Published online by Cambridge University Press:  30 January 2004

PIETRO GARIBALDI
Affiliation:
Bocconi University and CEPR

Abstract

This paper studies the effects of employment protection legislation when job separation requires a mandatory advance notice or a firm's costly closure. In a tight labor market, firms use mandatory notice since job-to-job transitions reduce the expected firing costs. In a world without the lengthy procedure imposed by advance notice, job turnover is mainly accommodated by unemployment inflows. As notice length increases, the fraction of job turnover accounted for by job-to-job movements increases. These results are consistent with the fact that the North American and European markets, despite their difference in employment protection legislation, have different unemployment flows but similar job flows.

Type
Research Article
Copyright
© 2004 Cambridge University Press

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Addison J.T. M. Blackburn 1994 The Worker Adjustment and Retraining Notification Act. Journal of Economic Perspectives 8, 181190.Google Scholar
Addison J.T. M. Blackburn 1997 A puzzling aspect of the effect of advance notice on unemployment. Industrial and Labor Relations Review 50, 268288.Google Scholar
Addison J.T. J. Chilton 1997 Nondisclosure as a contract remedy: Explaining the advance-notice puzzle. Journal of Labor Economics 15, 143164.Google Scholar
Addison J.T. F. Douglas C. Ruhm 1992 The impact of advance notice: A comment on a study by Nord and Ting. Industrial and Labor Relations Review 45, 665673.Google Scholar
Bentolila S. G. Bertola 1990 Firing costs and labor demand: How bad is Eurosclerosis? Review of Economic Studies 57, 381402.Google Scholar
Bertola G. R. Rogerson 1997 Institutions and labor reallocation. European Economic Review 41, 11471171.Google Scholar
Blanchard O. P. Diamond 1990 The cyclical behavior of the gross flows of US workers. Brookings Papers on Economic Activity 2, 85155.Google Scholar
Blanchard O. P. Portugal 2001 What hides behind an unemployment rate: Comparing Portuguese and U.S. unemployment. American Economic Review 91, 9931008.Google Scholar
Boeri T. 1999 Enforcement of employment security regulations, on-the-job search and unemployment duration. European Economic Review 43, 6589.Google Scholar
Burda M. 1992 A note on firing costs and severance benefits in equilibrium unemployment. Scandinavian Journal of Economics 94, 479489.Google Scholar
Burgess P. L. Stuart 1992 Preunemployment job search and advance job loss notice. Journal of Labor Economics 10, 258287.Google Scholar
Ehrenberg R. G. Jakubson 1988 Advance Notice Provisions in Plant Closing Legislation: Do They Matter? NBER working paper 2611.
Garibaldi P. 1998 Job flow dynamics and firing restrictions. European Economic Review 42, 245284.Google Scholar
Garibaldi P. 1999 Search Unemployment with Advance Notice. CEPR discussion paper 2164.
Kahn S. 1997 Evidence of nominal wage stickiness from microdata. American Economic Review 87, 9931008.Google Scholar
Kuhn P. 1992 Mandatory notice. Journal of Labor Economics 10, 117137.Google Scholar
McLaughlin K. 1991 A theory of quits and layoffs with efficient turnover. Journal of Political Economy 99, 129.Google Scholar
Millard S. D.T. Mortensen 1997 The unemployment and welfare effects of labor market policy: A comparison of the U.S. and the U.K. D.J. Snower G. de la Dehesa (eds.) Unemployment Policy: How Government Should Respond to Unemployment. Cambridge, UK: Cambridge University Press.
Mortensen D.T. C. Pissarides 1994 Job creation and job destruction in the theory of unemployment. Review of Economic Studies 61, 397415.Google Scholar
OECD 1994 Employment Outlook, 103166.
OECD 1999 Employment Outlook,
Pfann G. 2001a Options to quit. Economic Letters 70, 259265.Google Scholar
Pfann G. 2001b Downsizing. IZA discussion papers 307.
Pissarides C. 1994 Search unemployment with on-the-job search. Review of Economic Studies 61, 457475.Google Scholar
Pissarides C. 2000 Equilibrium Unemployment Theory. Cambridge, MA: MIT Press.