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The Long-Term Costs of Job Displacement for Young Adult Workers

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  • Lori G. Kletzer
  • Robert W. Fairlie

Abstract

Using NLSY data, the authors estimate the long-term costs of job displacement for young adults. Earnings and wage losses were large for the first three years following displacement. Compared to earnings losses found by other studies for more mature workers, however, earnings losses for these young adults were short-lived, with differences between observed and expected earnings narrowing considerably five years after job loss. At that point, the shortfall in annual earnings (relative to what would have been expected absent job loss) was 9% for men and 12.5% for women, and the shortfall in hourly wages was 21.2% for men. Young workers also apparently differ from more established workers in the composition of total earnings losses: for older workers, total losses largely represent actual, immediate earnings losses, whereas for young workers the loss of opportunities for rapid earnings growth is more important.

Suggested Citation

  • Lori G. Kletzer & Robert W. Fairlie, 2003. "The Long-Term Costs of Job Displacement for Young Adult Workers," ILR Review, Cornell University, ILR School, vol. 56(4), pages 682-698, July.
    • Handle: RePEc:sae:ilrrev:v:56:y:2003:i:4:p:682-698
    DOI: 10.1177/001979390305600408
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    References listed on IDEAS

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    1. Addison, John T & Portugal, Pedro, 1989. "Job Displacement, Relative Wage Changes, and Duration of Unemployment," Journal of Labor Economics, University of Chicago Press, vol. 7(3), pages 281-302, July.
    2. Stevens, Ann Huff, 1997. "Persistent Effects of Job Displacement: The Importance of Multiple Job Losses," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages 165-188, January.
    3. Topel, Robert, 1990. "Specific capital and unemployment: Measuring the costs and consequences of job loss," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 33(1), pages 181-214, January.
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