Non-Stationary Job Search with Firing: A Structural Estimation
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Universidad Complutense de Madrid
info
Journal:
Documentos de Trabajo ( CEMFI )
Year of publication: 1998
Issue: 2
Type: Working paper
Abstract
This paper modifies Van den Berg's (1990) nonstationary model of search, considering the existence of a firing probability. The presence of firing makes unemployed workers lower their reservation wage because of the entitlement effect embodied in accepting a job offer. In this nonstationary environment, reservation wages have a stronger time-dependence than without firing.