UNEMPLOYMENT DURATION AND IMPERFECT INFORMATION – A LABOR MARKET “SEARCH WITH MISPERCEPTION” MODEL

Motivated by the importance of the “displaced worker” phenomenon in both the East and the West, in this paper the authors analyze a model of job search behavior where the unemployed worker has imperfect knowledge of the wage offer distribution. This paper attempts within the limits imposed by the assumptions of the model to show that and explain why some individuals or groups of individuals have unemployment spells longer than other with similar general human capital characteristics under comparable labor market conditions. The authors suggest some possible tests that can address empirically the relationship between the general and job-specific skills of the unemployed and the length of their unemployment spells that can be developed.