Temporary Layoffs in the Theory of Unemployment

  title={Temporary Layoffs in the Theory of Unemployment},
  author={Martin S. Feldstein},
  journal={Journal of Political Economy},
  pages={937 - 957}
  • M. Feldstein
  • Published 1 October 1976
  • Economics
  • Journal of Political Economy
The typical worker who is laid off is soon rehired by his original employer. This important and generally unnoticed fact requires a major reevaluation of our current theories of unemployment. This paper develops a theory of temporary layoffs. Specific attention is given to the question of why employment is reduced instead of hours. The role of unemployment insurance and of taxes is examined in detail. 
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