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Job Insecurity

Kuvalekar, Aditya and Lipnowski, Elliot (2020) 'Job Insecurity.' American Economic Journal: Microeconomics, 12 (2). pp. 188-229. ISSN 1945-7669

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We examine the relationship between job security and productivity in a fixed wage worker­firm relationship facing match quality uncertainty. The worker’s action affects both learning and current productivity. The firm, seeing worker behavior and outcomes, makes a firing decision. As bad news accrues, the firm cannot commit to retain the worker. This creates perverse incentives: the worker strat egically slows learning, harming productivity. We fully characterize the unique equilibrium in our continuous time game. Consistent with some evidence in organizational psychology, the relationship between job insecurity and productivity is U shaped: a worker is least productive when his job is moderately secure.

Item Type: Article
Divisions: Faculty of Social Sciences
Faculty of Social Sciences > Economics, Department of
SWORD Depositor: Elements
Depositing User: Elements
Date Deposited: 21 Jul 2020 09:52
Last Modified: 06 Jan 2022 14:16

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