suppose that you are working for international steel a company fiercel

Suppose that you are working for INTERNATIONAL STEEL, a company fiercely threatened by international competition. During the forthcoming company restructuring, about 10 per cent of all white-collar workers are to be fired. However, it is possible that the company will go bankrupt and if this happens all the workers will lose their jobs.
1. Explain the concepts of hidden information and adverse selection.
2. Explain the concepts of signaling and screening.
Empirical evidence suggests that white-collar workers who have been displaced by lay-offs endure longer unemployment periods and find jobs with lower salaries than those displaced by plant closing. This problem is often referred to as a lemons problem.
3. Explain the empirical findings in the example elaborating on the role of information.
4. Does moral hazard play a role in this situation?
INTERNATIONAL STEEL opted for the first option: it decided to lay off 10 per cent of all white-collar workers. Suppose that you are now a negotiator for the biggest labor union of the company.
5. What would you demand from the employers in order to eliminate the lemons effect mentioned above?
Suppose now that you are working in the recruitment department of UNITED STEEL, the prime competitor of INTERNATIONAL STEEL. You are considering recruiting former employees of INTERNATIONAL STEEL.

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