Working Paper

Recall and Unemployment

Abstract: We document in the Survey of Income and Program Participation covering 1990- 2013 that a surprisingly large share of workers return to their previous employer after a jobless spell and experience very different unemployment and employment outcomes than job switchers. The probability of recall is much less procyclical and volatile than the probability of finding a new employer. We add to a quantitative, and otherwise canonical, search-and-matching model of the labor market a recall option, which can be activated freely following aggregate and job-specific productivity shocks. Recall and search effort significantly amplify the cyclical volatility of new job-finding and separation probabilities.

Keywords: Recall; unemployment; duration; matching function; business cycles;

JEL Classification: E24; E32; J64;

Bibliographic Information

Provider: Federal Reserve Bank of Philadelphia

Part of Series: Working Papers

Publication Date: 2017-06-29

Number: 17-29

Pages: 75 pages