Mandatory Notice and Unemployment

Abstract

We use newly available data from the Ontario Ministry of Labour to estimate the effects of advance notification of permanent layoff on unemployment durations. While notice is strongly negatively correlated with unemployment in the raw data, most of this effect disappears when we control for personal characteristics and when we correct for endogeneity of notice by using only its cross-firm variation to identify its effects. Overall, while short notice intervals can have a substantial effect on the probability of experiencing a short unemployment spell, we find that even very long notice intervals have little impact on long-term unemployment.