Finance and Economics Discussion Series (FEDS)
June 2003
The Recall and New Job Search of Laid-off Workers: A Bivariate Proportional Hazard Model with Unobserved Heterogeneity
Bruce Fallick and Keunkwan Ryu
Abstract:
Workers who lose their jobs can become re-employed either by being recalled to their previous employers or by finding new jobs. Workers' chances for recall should influence their job search strategies, so the rates of exit from unemployment by these two routes should be directly related. We solve a job search model to establish, in theory, a negative relationship between the recall and new job hazard rates. We look for evidence in the PSID by estimating a semi-parametric competing risks model with explicitly related hazards. We find only a small negative behavioral relationship between recall and new job hazard rates.
Keywords: Lay-off, recall, job search, hazard rate, proportional hazard model, unobserved heterogeneity, duration dependence
PDF: Full Paper
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