TY  - JOUR
AU  - Grossman,Herschel I.
TI  - Risk Shifting, Unemployment Insurance, and Layoffs
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 424
PY  - 1981
Y2  - August 1981
UR  - http://www.nber.org/papers/w0424
L1  - http://www.nber.org/papers/w0424.pdf
N1  - Author contact info:
Herschel Grossman
Department of Economics
Box B
Brown University
Providence, RI  02912
Tel: 401/863-2606
Fax: 401/863-1970
AB  - This paper develops an analysis of labor markets in which the use of layoffs to effect employment separations does not imply that markets fail to clear or that the amount of employment is suboptimal relative to current perceptions. This analysis focuses on the interaction between contractual arrangements for shifting risk from workers to employers and tax-financed unemployment insurance. The key element in the analysis is that unemployment insurance is more attractive than risk shifting as a way for workers to obtain income during unemployment. The paper also analyses the effects of risk shifting and unemployment insurance on the magnitude of employment fluctuations. The analysis implies that, given the existence of unemployment insurance, the existence of risk-shifting arrangements makes employment less variable.
ER  -