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Job Loss in the United States, 1981-2001

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  • Henry Farber
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    Abstract

    I examine changes in the incidence and consequences of job loss between 1981 and 2001 using data from the Displaced Workers Surveys (DWS) from 1984-2002. The overall rate of job loss has a strong counter-cyclical component, but the job loss rate was higher than might have been expected during the mid-1990's given the strong labor market during that period. While the job loss rate of more-educated workers increased, less-educated workers continue to have the highest rates of job loss overall. Displaced workers have a substantially reduced probability of employment and an increased probability of part-time employment subsequent to job loss. The more educated have higher post-displacement employment rates and are more likely to be employed full-time. The probabilities of employment and full-time employment among those reemployed subsequent to job loss increased substantially in the late 1990s, suggesting that the strong labor market eased the transition of displaced workers. Reemployment rates dropped sharply in the recession of 2001. Those re-employed, even full-time and regardless of education level earnings declines relative to what they earned before they were displaced. Additionally, foregone earnings growth (the growth in earnings that would have occurred had the workers not been displaced), is an important part of the cost of job loss for re-employed full-time job losers. There is no evidence of a decline during the tight labor market of the 1990s in the earnings loss of displaced workers who were reemployed full-time. In fact, earnings losses of displaced workers have been increasing since the mid 1990s.

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    Bibliographic Info

    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9707.

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    Date of creation: May 2003
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    Handle: RePEc:nbr:nberwo:9707

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    Cited by:
    1. Giovanna Vallanti, 2005. "Capital Mobility and Unemployment Dynamics: Evidence from a Panel of OECD Countries," CEP Discussion Papers dp0684, Centre for Economic Performance, LSE.
    2. Cavaco, Sandra & Fougère, Denis & Pouget, Julien, 2008. "Estimating the Effect of a Retraining Program on the Re-Employment Rate of Displaced Workers," CEPR Discussion Papers 7094, C.E.P.R. Discussion Papers.
    3. Giulio Fella, 2007. "Optimal Severance Pay in a Matching Model," Working Papers 598, Queen Mary, University of London, School of Economics and Finance.
    4. David Seim, 2012. "Job displacement and labor market outcomes by skill level," Bank of Estonia Working Papers wp2012-4, Bank of Estonia.

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