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The Effects of Being Out of the Labor Market on Subsequent Wages: Evidence for Uruguay

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  • Verónica Amarante

    ()

  • Rodrigo Arim

    ()

  • Andrés Dean

    ()

Abstract

Based on administrative data combining workers’ earnings histories and unemployment insurance benefits, we document short and long term wage losses for a large sample of Uruguayan formal workers with high tenure. The contribution of this paper is to provide original evidence about job separation costs in a developing country, based on a unique array of social security and unemployment insurance administrative micro-data. Our main findings indicate that workers lose around 38 % of their previous wages in the first quarter after separation, and 1 year after, losses are still more than 14 %. If we consider earnings plus unemployment insurance benefits, losses at the quarter of separation are considerable lower, amounting 22 % of previous wages. We also provide original evidence about how wage losses vary across age groups, gender, industry and size of the firm. Differences between switchers and non switchers, as well as the effects of the economic cycle are also analyzed. Copyright Springer Science+Business Media New York 2014

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File URL: http://hdl.handle.net/10.1007/s12122-013-9171-3
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Bibliographic Info

Article provided by Springer in its journal Journal of Labor Research.

Volume (Year): 35 (2014)
Issue (Month): 1 (March)
Pages: 39-62

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Handle: RePEc:spr:jlabre:v:35:y:2014:i:1:p:39-62

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Web page: http://www.springer.com/economics/journal/12122

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Related research

Keywords: Wage losses; Job separation; J31; J63; 65;

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  14. Jukka Appelqvist, 2007. "Wage and Earnings Losses of Displaced Workers in Finland," Discussion Papers 422, Government Institute for Economic Research Finland (VATT).
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Cited by:
  1. Verónica Amarante & Andrés Dean, 2012. "Dinámica del mercado laboral uruguayo," Documentos de Trabajo basados en Monografías (students working papers) 12-17, Instituto de Economía - IECON.

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