Wait and See: The Labour Market Implications of Economic Uncertainty

Wouter J. Den Haan, Lukas B. Freund, Pontus Rendahl

Publikation: AndetUdgivelser på nettet - Net-publikationFormidling


It has been argued that increased uncertainty can worsen unemployment if employers prefer to wait and postpone job creation. However, under the dominant theory of unemployment – the search-and-matching model – the value of waiting plays no role. This column proposes an amended model which relaxes some of the theoretical assumptions, and shows that an increase in perceived uncertainty does indeed increase the value of waiting, thus reducing job creation.
Publikationsdato11 sep. 2021
UdgiverCentre for Economic Policy Research
StatusUdgivet - 11 sep. 2021