Worker turnover and unemployment insurance

Se Kyu Choi, Javier Fernández-Blanco

Research output: Contribution to journalArticle (Academic Journal)peer-review

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This article studies a competitive search model of the labor market with learning about match‐specific productivity in which risk‐averse workers factor present and future unemployment risks in their search decisions. We examine internally efficient equilibrium allocations in which match termination occurs only if the joint value of a worker–firm pair is negative. Internal efficiency poses a trade‐off between present and future risks. Public insurance provision also affects this trade‐off and, hence, worker turnover and job composition. In addition to unemployment benefits, the implementation of the planner's allocation requires a negative income tax and a 0 layoff tax.
Original languageEnglish
Pages (from-to)1837-1876
Number of pages40
JournalInternational Economic Review
Issue number4
Early online date4 Jun 2018
Publication statusPublished - Nov 2018

Structured keywords

  • ECON Macroeconomics
  • ECON CEPS Welfare


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