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Lies and layoffs. Asymmetric information and unemployment equilibrium

Author

Listed:
  • John Malowny

    (The Plymouth Business School)

Abstract

Implicit contracts were initially seen as a form of insurance. Workers bought a less variable wage at the expense of a slightly lower average wage. But as long as this idea of implicit contracts persisted, they could do little to explain unemployment. A risk-averse worker is unlikely to buy a steadier wage if it is at the increased risk of losing his job. He might do so if the disutility of labour or the level of unemployment benefit were high enough, but in such cases we are effectively back with the classical version of unemployment.

Suggested Citation

  • John Malowny, 1987. "Lies and layoffs. Asymmetric information and unemployment equilibrium," Documentos de trabajo de la Facultad de Ciencias Económicas y Empresariales 87-26, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales.
    • Handle: RePEc:ucm:doctra:87-26
    as

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