Loss of skill during unemployment and the persistence of employment shocks

Pissarides, Christopher ORCID: 0000-0002-0695-058X (1992) Loss of skill during unemployment and the persistence of employment shocks. Quarterly Journal of Economics, 107 (4). pp. 1371-1392. ISSN 0033-5533

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Abstract

This paper shows that when unemployed workers lose some of their skills, the effects of a temporary shock to employment can persist for a long time. The key mechanism is a thin market externality that reduces the supply of jobs when the duration of unemployment increases. The paper develops an overlapping-generations model of search equilibrium and shows that different patterns of persistence and multiple equilibria are possible even with constant returns production and matching technologies.

Item Type:	Article
Official URL:	http://qje.oxfordjournals.org/
Additional Information:	© 1992 The President and Fellows of Harvard College and the Massachusetts Institute of Technology
Divisions:	Economics Centre for Economic Performance
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HD Industries. Land use. Labor
JEL classification:	J - Labor and Demographic Economics > J6 - Mobility, Unemployment, and Vacancies
Date Deposited:	27 Apr 2007
Last Modified:	29 Jan 2025 18:03
URI:	http://eprints.lse.ac.uk/id/eprint/1145

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