NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Sectoral Shocks and Structural Unemployment

Michael H. Riordan, Robert W. Staiger

NBER Working Paper No. 2522
Issued in February 1988
NBER Program(s):   ITI   IFM

When current employers rave more information about worker quality than to potential employers, sectoral shocks cause structural unemployment. That is, some workers laid off from an injured sector remain unemployed despite the fact that trey are of sufficient quality to be productively employed in an expanding sector at toe prevailing wage, Moreover, sectoral unemployment rates are not monotonic in one severity of sectoral shocks due to one interaction of layoff activity and hiring activity. Finally, equilibrium employment decisions are not constrained Pareto efficient, and can be improved by a policy of adjustment assistance.

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Document Object Identifier (DOI): 10.3386/w2522

Published: International Economic Review, vol. 34, no. 3, August 1993 citation courtesy of

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