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The Cost of Job Loss

Burdett, Kenneth and Carrillo Tudela, Carlos and Coles, Melvyn (2020) 'The Cost of Job Loss.' The Review of Economic Studies, 87 (4). 1757 - 1798. ISSN 0034-6527

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Abstract

This paper identifies an equilibrium theory of wage formation and endogenous quit turnover in a labour market with on-the-job search, where risk averse workers accumu- late human capital through learning-by-doing and lose skills while unemployed. Optimal contracting implies the wage paid increases with experience and tenure. Indirect inference using German data determines the deep parameters of the model. The estimated model not only reproduces the large and persistent fall in wages and earnings following job loss, a new structural decomposition finds foregone human capital accumulation (while unemployed) is the worker's major cost of job loss.

Item Type: Article
Uncontrolled Keywords: Job search, human capital accumulation, job loss
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Elements
Date Deposited: 21 Feb 2020 12:33
Last Modified: 10 Jul 2020 09:15
URI: http://repository.essex.ac.uk/id/eprint/26871

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