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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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    Publication status: published as Polachek, Solomon W. (ed.) Accounting for worker well-being, Research in Labor Economics, vol. 23. Amsterdam, San Diego and Oxford: Elsevier, 2004.
    Handle: RePEc:nbr:nberwo:9707

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    Cited by:
    1. Doh-Shin Jeon & Joel Shapiro, 2004. "Downsizing, Job Insecurity, and Firm Reputation," Working Papers 144, Barcelona Graduate School of Economics.
    2. Giulio Fella, 2007. "Optimal Severance Pay in a Matching Model," Working Papers, Queen Mary, University of London, School of Economics and Finance 598, Queen Mary, University of London, School of Economics and Finance.
    3. Burfisher, Mary E. & Hanson, Kenneth & Hopkins, Jeffrey W. & Somwaru, Agapi, 2004. "Global Agricultural Reform and U.S. Agricultural Adjustment Capacity," IAPRAP\IATRC Summer Symposium, Adjusting to Domestic and International Agricultural Reform in Industrial Countries, June 6-7, 2004, Philadelphia, PA, International Agricultural Policy Reform and Adjus 15763, International Agricultural Policy Reform and Adjustment Project (IAPRAP).
    4. Sandra Cavaco & Denis Fougère & Julien Pouget, 2013. "Estimating the effect of a retraining program on the re-employment rate of displaced workers," Empirical Economics, Springer, Springer, vol. 44(1), pages 261-287, February.
    5. Till von Wachter & Stefan Bender, 2008. "Do Initial Conditions Persist between Firms? An Analysis of Firm-Entry Cohort Effects and Job Losers Using Matched Employer-Employee Data," NBER Chapters, National Bureau of Economic Research, Inc, in: The Analysis of Firms and Employees: Quantitative and Qualitative Approaches, pages 135-162 National Bureau of Economic Research, Inc.
    6. Krebs, Tom & Scheffel, Martin, 2010. "A macroeconomic model for the evaluation of labor market reforms," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 10-050, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    7. Giovanna Vallanti, 2005. "Capital Mobility and Unemployment Dynamics: Evidence from a Panel of OECD Countries," CEP Discussion Papers, Centre for Economic Performance, LSE dp0684, Centre for Economic Performance, LSE.
    8. Steven F. Lehrer & Nuno Sousa Pereira, 2008. "Worker Sorting, Health Insurance and Wages: Further Evidence from Displaced Workers in the United States," CEF.UP Working Papers, Universidade do Porto, Faculdade de Economia do Porto 0804, Universidade do Porto, Faculdade de Economia do Porto.
    9. David Seim, 2012. "Job displacement and labor market outcomes by skill level," Bank of Estonia Working Papers, Bank of Estonia wp2012-4, Bank of Estonia.
    10. John Martin & Stefano Scarpetta, 2012. "Setting It Right: Employment Protection, Labour Reallocation and Productivity," De Economist, Springer, Springer, vol. 160(2), pages 89-116, June.

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