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Displaced workers, early leavers, and re-employment wages

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Author Info
Audra Bowlus (University of Western Ontario)
Lars Vilhuber () (Department of Economics, York University)

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Abstract

When receiving information about an imminent plant closure or mass layoffs, workers search for new jobs. This has been the premise of advance notice legislation, but has been difficult to verify using survey data. In this paper, we lay out a search model that takes explicitly into account the information flow prior to a mass layoff. Using universal wage data files that allow us to identify individuals working with healthy and displacing firms both at the time of displacement as well as any other time period, we test the predictions of the model on re-employment wages. Controlling for worker quality and unobservable firm characteristics, workers leaving a "distressed" firm have higher re-employment wages than workers who stay with the distressed firm until displacement.

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Publisher Info
Paper provided by International Conferences on Panel Data in its series 10th International Conference on Panel Data, Berlin, July 5-6, 2002 with number C1-1.

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Date of creation: Mar 2002
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Handle: RePEc:cpd:pd2002:c1-1

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Related research
Keywords: Displaced workers; search theory; advance notice; linked firm-worker data sets;

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Find related papers by JEL classification:
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
J63 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Turnover; Vacancies; Layoffs
J65 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment Insurance; Severance Pay; Plant Closings

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Harry Krashinsky, 2002. "Evidence on adverse selection and establishment size in the labor market," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 56(1), pages 84-96, October.
  2. Kletzer, Lori G, 1998. "Job Displacement," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 115-36, Winter. [Downloadable!] (restricted)
  3. John T. Addison & Pedro Portugal, 1987. "The effect of advance notification of plant closings on unemployment," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 41(1), pages 3-16, October.
  4. Jones, Stephen R G & Kuhn, Peter, 1995. "Mandatory Notice and Unemployment," Journal of Labor Economics, University of Chicago Press, vol. 13(4), pages 599-622, October. [Downloadable!] (restricted)
  5. Bruce C. Fallick, 1996. "A review of the recent empirical literature on displaced workers," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 50(1), pages 5-16, October.
  6. Abowd, John M. & Vilhuber, Lars, 2005. "The Sensitivity of Economic Statistics to Coding Errors in Personal Identifiers," Journal of Business & Economic Statistics, American Statistical Association, vol. 23, pages 133-152, April. [Downloadable!] (restricted)
    Other versions:
  7. Farber, Henry S, 1999. "Alternative and Part-Time Employment Arrangements as a Response to Job Loss," Journal of Labor Economics, University of Chicago Press, vol. 17(4), pages S142-69, October. [Downloadable!] (restricted)
  8. Fallick, Bruce Chelimsky, 1994. "The Endogeneity of Advance Notice and Fear of Destructive Attrition," The Review of Economics and Statistics, MIT Press, vol. 76(2), pages 378-84, May. [Downloadable!] (restricted)
  9. repec:fth:prinin:394 is not listed on IDEAS
  10. Jacobson, Louis S & LaLonde, Robert J & Sullivan, Daniel G, 1993. "Earnings Losses of Displaced Workers," American Economic Review, American Economic Association, vol. 83(4), pages 685-709, September. [Downloadable!] (restricted)
    Other versions:
  11. Pagan, Adrian, 1984. "Econometric Issues in the Analysis of Regressions with Generated Regressors," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 25(1), pages 221-47, February. [Downloadable!] (restricted)
  12. Ruhm, Christopher J, 1992. "Advance Notice and Postdisplacement Joblessness," Journal of Labor Economics, University of Chicago Press, vol. 10(1), pages 1-32, January. [Downloadable!] (restricted)
  13. Ruhm, Christopher J, 1994. "Advance Notice, Job Search, and Postdisplacement Earnings," Journal of Labor Economics, University of Chicago Press, vol. 12(1), pages 1-28, January. [Downloadable!] (restricted)
  14. Dale Mortensen, 1984. "Job Search and Labor Market Analysis," Discussion Papers 594, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
    Other versions:
  15. Henry S. Farber, 1999. "Alternative and Part-Time Employment Arrangements as a Response to Job Loss," NBER Working Papers 7002, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  16. Abowd, John M. & Kramarz, Francis, 1999. "Econometric analyses of linked employer-employee data," Labour Economics, Elsevier, vol. 6(1), pages 53-74, March. [Downloadable!] (restricted)
  17. Bruce C. Fallick, 1995. "A review of the recent empirical literature on displaced workers," Finance and Economics Discussion Series 95-14, Board of Governors of the Federal Reserve System (U.S.).
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Guido Schwerdt, 2007. "Labor Turnover before Plant Closure:'Leaving the sinking ship' vs. 'Captain throwing ballast overboard'," Economics Working Papers ECO2007/22, European University Institute. [Downloadable!]
    Other versions:
  2. John M. Abowd & Lars Vilhuber, 2002. "The Sensitivity of Economic Statistics to Coding Errors in Personal Identifiers," Technical Papers 2002-17, Longitudinal Employer-Household Dynamics, Center for Economic Studies, U.S. Census Bureau, revised Mar 2003. [Downloadable!]
    Other versions:
  3. Kevin McKinney & Lars Vilhuber, 2006. "Using linked employer-employee data to investigate the speed of adjustments in downsizing firms," Technical Papers 2006-03, Longitudinal Employer-Household Dynamics, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
  4. Kristiina Huttunen & Jarle Møen & Kjell G. Salvanes, 2006. "How Destructive Is Creative Destruction? The Costs of Worker Displacement," IZA Discussion Papers 2316, Institute for the Study of Labor (IZA). [Downloadable!]
  5. Yolanda K. Kodrzycki, 2007. "Using unexpected recalls to examine the long-term earnings effects of job displacement," Working Papers 07-2, Federal Reserve Bank of Boston. [Downloadable!]
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