Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/75962 
Year of Publication: 
2002
Series/Report no.: 
CESifo Working Paper No. 708
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
In this paper we investigate the incentives of unemployed workers to wait for a recall when recall probabilities are endogenously determined by the waiting decisions of others. Because of a positive externality that arises when workers seek new employment, an excessive number of workers choose to wait for a recall, and structural adjustment is slow. We also find that a small reduction in the unemployment benefits, or introducing a small cash bonus for workers that get a new job, may have no e.ect on unemployment in some cases, while eradicating significant levels of unemployment in other cases. Our analysis suggests that the government may face a Samaritan's Dilemma if it can influence the recall probability of workers, and that multiple equilibria may exist in a game involving both workers and an unemployment-averse government. Furthermore, we explore a link to the war of attrition literature, showing that the Bulow and Klemperer (1999) one too many -result may not hold if there is uncertainty concerning when the game ends.
Subjects: 
structural adjustment
unemployment
recalls
search
war of attrition.
Document Type: 
Working Paper
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