DP483 Unemployment through `Learning from Experience'
|Author(s):||Steve Alpern, Dennis J. Snower|
|Publication Date:||November 1990|
|Keyword(s):||Learning, Unemployment, Wage Information|
|JEL(s):||022, 023, 026, 821|
|Programme Areas:||Applied Macroeconomics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=483|
This paper shows that when workers have some market power and face substantial uncertainty concerning their productivity, it may be in their interest to formulate their wage claims with a view to the information thereby revealed. This learning behaviour may in turn be responsible for unemployment. Our analysis shows how the process of information acquisition through wage claims generates a higher rate of youth unemployment and long-term unemployment and a lower probability of dismissal for incumbent workers than would otherwise be the case.