Working Paper: NBER ID: w3385
Authors: George A. Akerlof; Andrew K. Rose; Janet L. Yellen
Abstract: This paper explains upward job mobility and observed patterns of unemployment by skill as an economy recovers from a recession. Skilled unemployment is due to rational waiting by workers looking for long-term jobs when there is a "lock-in" effect. Lock-in occurs if the conditions in the labor market when a worker first accepts a job have a persistent effect on wages. Using longitudinal data, we provide empirical evidence of the cyclical pattern of wages predicted by the theory and also of lock-in.
Keywords: unemployment; job mobility; wages; labor market dynamics
JEL Codes: J64; E32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| economic conditions (E66) | workers' decisions (J29) |
| workers' decisions (J29) | wait unemployment (J64) |
| wait unemployment (J64) | cyclical unemployment (J64) |
| economic conditions (E66) | cyclical wage dynamics (J31) |
| workers hired during boom periods (J23) | persistently high wages (J31) |
| workers hired during busts (J63) | significantly low wages (J31) |
| new job holders (J63) | procyclical real wages (J39) |