Layoffs and Lemons

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Layoffs and Lemons

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Title: Layoffs and Lemons
Author: Gibbons, Robert; Katz, Lawrence F.

Note: Order does not necessarily reflect citation order of authors.

Citation: Gibbons, Robert, and Lawrence F. Katz. 1991. Layoffs and lemons. Journal of Labor Economics 9(4): 351-380.
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Abstract: We provide theoretical and empirical analyses of an asymmetric-information model of layoffs. When firms have discretion with respect to whom to lay off, the market infers that laid-off workers are of low ability. Assuming that no such negative inference is warranted if workers are displaced in a plant closing, postdisplacement wages should be lower and postdisplacement unemployment spells should be longer for those displaced by layoffs than for those displaced by plant closings, but predisplacement wages should not differ by cause of displacement. Evidence on displaced workers from Current Population Surveys supports all three of our model's predictions.
Published Version: http://www.jstor.org/stable/2535075
Terms of Use: This article is made available under the terms and conditions applicable to Other Posted Material, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#LAA
Citable link to this page: http://nrs.harvard.edu/urn-3:HUL.InstRepos:3442782

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  • FAS Scholarly Articles [6885]
    Peer reviewed scholarly articles from the Faculty of Arts and Sciences of Harvard University
 
 

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