Wait and See: The Labour Market Implications of Economic Uncertainty

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

Research output: Other contributionNet publication - Internet publicationCommunication

Abstract

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.
Original languageEnglish
Publication date11 Sep 2021
Place of PublicationLondon
PublisherCentre for Economic Policy Research
Publication statusPublished - 11 Sep 2021

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