TY  - JOUR
AU  - Caplin,Andrew
AU  - Leahy,John
TI  - Mass Layoffs and Unemployment
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4766
PY  - 1994
Y2  - June 1994
UR  - http://www.nber.org/papers/w4766
L1  - http://www.nber.org/papers/w4766.pdf
N1  - Author contact info:
Andrew Caplin
Department of Economics
New York University
19 W. 4th Street, 6th Floor
New York, NY  10012
Tel: 212/998-8950
Fax: 212/995-3932
E-Mail: andrew.caplin@nyu.edu

John V. Leahy
Department of Economics
New York University
19 W. 4th Street, 6th Floor
New York, NY  10012
Tel: 212/992-9770
E-Mail: john.leahy@nyu.edu
AB  - Mass layoffs give rise to groups of unemployed workers who possess similar characteristics and therefore may learn from one another's experience searching for a new job.  Two factors lead them to be too selective in the job offers that they accept.  The first is an information externality: searchers fail to take into account the value of their experience to others.  The second is an incentive to free ride: each worker would like others to experiment and reveal information concerning productive jobs.  Together these forces imply that in equilibrium the natural rate of unemployment is too high.
ER  -