WORKERS AS INSURANCE: ANTICIPATED GOVERNMENT ASSISTANCE AND FACTOR DEMAND

摘要: This paper investigates the effect of anticipation government assistance on factor demand when likeliho od intervention is perceived to increase with numbers worke rs laid off in event an adverse realization product price. Workers thus serve, imperfectly, insurance function for firm. Internalization by firms political sensitivity governments unemployment results more labor being employed and output produced, although not necessarily labor-intensive methods. T he can be implicit subsidy capital. An adverse-selection firms' locational choice also identified. Copyright 1987 Royal Economic Society.