A Signaling Theory of Unemployment / Ching-to Albert Ma, Andrew M. Weiss.

Format:

Book

Author/Creator:

Ma, Ching-to Albert.

Contributor:

National Bureau of Economic Research.

Weiss, Andrew M.

Series:

Working Paper Series (National Bureau of Economic Research) no. w3565.

NBER working paper series no. w3565

Language:

English

Subjects (All):

Unemployment--Mathematical models.

Unemployment.

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1990.

Cambridge, Massachusetts : National Bureau of Economic Research, 1990.

Summary:

This paper presents a signaling explanation for unemployment. The basic idea is that employment at an unskilled job may be regarded as a bad signal. Therefore, good workers who are more likely to qualify for employment at a skilled job in the future are better off being unemployed than accepting an unskilled job. We present conditions under which all equilibria satisfying the Cho-Kreps intuitive criterion involve unemployment. However, there always exist budget balancing wage subsidies and taxes that eliminate unemployment. Also, for any unemployment equilibrium, either there always exists a set of Pareto improving wage taxes and subsidies, or we give conditions under which there exists a set of Pareto improving wage taxes and subsidies.

Notes:

Print version record

December 1990.