22 Lecture%20Turnover%20Joblock%202010%20for%20post

22 Lecture%20Turnover%20Joblock%202010%20for%20post -...

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LECTURE 22 TURNOVER AND JOB LOCK
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LAST TIME Unemployment Insurance Temporary income assistance to unemployed workers Effect on job search: increase asking wage and unemployment duration Positive – better match between workers and firms Negative – disincentive to seek employment
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ANNOUNCEMENTS Problem Set 5 due next Thursday (11/18) Today Long term effects of unemployment Turnover Job lock
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EMPIRICAL EVIDENCE What do we expect? Take-up rates? Who will be new takers? Findings: Little evidence that telephone/web filing increased take-up Nor did fraction of high wage takers increase
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WHAT EFFECT DOES UI HAVE ON FIRM BEHAVIOR? Firms want to layoff workers during periods of slow demand May be less costly to rehire the same workers What will happen to wages if worker knows firm has high layoff rate? b compensating wage differential What happens with UI? State is covering part of differential Incentive for firms to abuse system
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EXPERIENCE RATING Measure to reduce firm moral hazard Firms that have more layoffs pay higher UI payroll tax Those firms that have more layoffs, pay more, but imperfect Why need UI if compensating differential exists?
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LONG-TERM EFFECTS OF UNEMPLOYMENT AND JOB LOSS Short-term effect No wage income Maybe some income replaced by UI We saw most unemployment spells are less than 5 weeks A little bad luck not have a large impact on lifetime earnings What if Unemployment spell changes earnings trajectory?
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VON WACHTER AND BENDER Examine the outcomes of young workers in Germany Compare wages of “unlucky” job losers to those that keep jobs Important confounds Job losers are adversely selected Most losers are from firms with high turnover – lower quality workers may select into these firms Find 15% earnings reduction, but fades after 5 years
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VON WACHTER, OREOPOULOS, HEISZ Question: What is the long term impact of a recession for college grads entering the labor market? Look at employer-employee matched data for workers in Canada Findings: 9% decrease in earnings, halved after 5 years, faded after 10 Improvement comes by moving to better firms Worse for those that are “lower ability” More on this: http://www.kqed.org/epArchive/R902130900
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EVIDENCE THAT JOB LOSS IS A BAD SIGNAL? Recall:
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22 Lecture%20Turnover%20Joblock%202010%20for%20post -...

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