Reconsidering the Consequences of Worker Displacements: Firm versus Worker Perspective
American Economic Journal: Macroeconomics
vol. 11,
no. 2, April 2019
(pp. 193-227)
Abstract
Prior literature has established that displaced workers suffer persistent earnings losses by following workers in administrative data after mass layoffs. This literature assumes that these are involuntary separations owing to economic distress. This paper examines this assumption by matching survey data on worker-supplied reasons for separations with administrative data. Workers exhibit substantially different earnings dynamics in mass layoffs depending on the reason for separation. Using a new methodology to account for the increased separation rates across all survey responses during a mass layoff, the paper finds earnings loss estimates that are surprisingly close to those using only administrative data.Citation
Flaaen, Aaron, Matthew D. Shapiro, and Isaac Sorkin. 2019. "Reconsidering the Consequences of Worker Displacements: Firm versus Worker Perspective." American Economic Journal: Macroeconomics, 11 (2): 193-227. DOI: 10.1257/mac.20170162Additional Materials
JEL Classification
- E32 Business Fluctuations; Cycles
- J31 Wage Level and Structure; Wage Differentials
- J63 Labor Turnover; Vacancies; Layoffs
- J64 Unemployment: Models, Duration, Incidence, and Job Search
- J65 Unemployment Insurance; Severance Pay; Plant Closings
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