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Earnings Losses of Displaced Workers: Evidence from a Matched Employer-Employee Data Set

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  • Anabela Carneiro
  • Pedro Portugal

Abstract

This paper examines the long-term earnings losses of displaced workers in Portugal, using a nationally representative longitudinal linked employer-employee data set. The results show that four years after displacement the earnings of displaced workers remain around 9% (women) to 12% (men) below their counterfactual expected levels. The post-displacement earnings losses are mainly associated with the loss of tenure within the firm and, to a lesser extent, to the loss of sector-specific features. Furthermore, workers who experienced a spell of nonemployment are the most affected by job displacement. Finally, this study points to the importance of controlling for employers' characteristics in this type of wages-dynamic analysis, since there are systematic differences in earnings between displaced and non-displaced workers that stem from differences in firm characteristics. Ignoring them may confound the evaluation of the earnings losses.

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Bibliographic Info

Paper provided by Banco de Portugal, Economics and Research Department in its series Working Papers with number w200614.

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Date of creation: 2006
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Handle: RePEc:ptu:wpaper:w200614

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References

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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.
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Citations

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Cited by:
  1. Black, Sandra E. & Devereux, Paul J. & Salvanes, Kjell G., 2012. "Losing Heart? The Effect of Job Displacement on Health," IZA Discussion Papers 7117, Institute for the Study of Labor (IZA).
  2. Jukka Appelqvist, 2007. "Wage and Earnings Losses of Displaced Workers in Finland," Discussion Papers 422, Government Institute for Economic Research Finland (VATT).
  3. Mion, Giordano & Opromolla, Luca David, 2011. "Managers' Mobility, Trade Status, and Wages," CEPR Discussion Papers 8230, C.E.P.R. Discussion Papers.
  4. Verónica Amarante & Rodrigo Arim & Andrés Dean, 2012. "The effects of being out of the labor market on subsequent wages: evidence for Uruguay," Documentos de Trabajo (working papers) 12-10, Instituto de Economía - IECON.
  5. Bruce Fallick & John Haltiwanger & Erika McEntarfer, 2012. "Job-to-job flows and the consequences of job separations," Finance and Economics Discussion Series 2012-73, Board of Governors of the Federal Reserve System (U.S.).
  6. Garcia Perez, Jose Ignacio & Rebollo Sanz, Yolanda, 2005. "Wage changes through job mobility in Europe: A multinomial endogenous switching approach," Labour Economics, Elsevier, vol. 12(4), pages 531-555, August.
  7. Ossi Korkeamäki & Tomi Kyyrä, 2008. "A Distributional Analysis of Displacement Costs in an Economic Depression and Recovery," Discussion Papers 465, Government Institute for Economic Research Finland (VATT).
  8. Zwick, Thomas, 2008. "Earnings Losses After Non-employment Increase With Age," ZEW Discussion Papers 08-041, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  9. 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.
  10. Pedro Portugal, 2006. "Wage Setting in the Portuguese Labor Market: A Microeconomic Approach," Economic Bulletin and Financial Stability Report Articles, Banco de Portugal, Economics and Research Department.

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