Working Paper: CEPR ID: DP14845
Authors: Arash Nekoei; Andrea Weber
Abstract: We establish seven facts about temporary layoffs (TL), whose employers communicated an anticipated recall date at layoff: (1) The higher the current TL share at firm/industry-level, the higher (lower) the future recall (layoff) likelihood for both temporary and permanent layoffs (employees); (2) TL is more prevalent in: the upper-middle part of the wage distribution, (3-4) in mass layoffs and recessions; (5) The later the communicated recall date, the lower the accepted new-job wage, unconditional and conditional on non-employment duration; (6) TLs' new-job hazard rate (wage) jumps (drops) when recall likelihood falls; (7) Extending unemployment benefits increases separations in recall-intense sectors.
Keywords: Classical Unemployment
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Higher share of TL at the firm level (G32) | Higher likelihood of recall for laid-off workers (J63) |
| Higher share of TL at the firm level (G32) | Lower future layoff likelihood (J63) |
| TL is more prevalent among upper-middle wage earners (J31) | Potential link between wage levels and type of layoff experienced (J63) |
| Higher TL shares (F16) | Increased likelihood of utilizing TL strategies during mass layoffs (J65) |
| Economic downturns (E32) | Increased likelihood of recall (C92) |
| Longer waiting periods for recall (C41) | Lower wage expectations for new jobs (J31) |
| Extending unemployment benefits (J65) | Increased separations in sectors with high TL (F12) |