Wage Formation and Recurrent Unemployment

Ragui Assaad () and Insan Tunali Tunali

No 2016, Working Papers from Economic Research Forum

Abstract: Cross-section data on non-contractual construction workers in Egypt reveal strong attachment to the sector despite demand instability. Also present are statistically significant wage differentials between construction trades. Preliminary examination suggests that employers might be compensating their non-contractual workforce for recurrent unemployment so that they can rely on a steady supply of qualified workers. We rely on a structural model and investigate the consequences of rationing, turnover, and randomness in employment and unemployment durations. Estimates reveal that employers provide only partial compensation against recurrent unemployment. Although aggregate risk premia associated with trade membership estimated with precision, individual risk components are not.

Pages: 28 pages
Date: 2000-08-06, Revised 2000-08-06
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Published by The Economic Research Forum (ERF)

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Related works:
Journal Article: Wage formation and recurrent unemployment (2002)
Working Paper: Wage Formation and Recurrent Unemployment (2000)
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