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Permanent Layoffs in Canada: Overview and Longitudinal Analysis

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  • Lin, Zhengxi Picot, Garnett Pyper, Wendy Zhengxi, Lin
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    Abstract

    Canadians are increasingly concerned about permanent layoffs, as many feel job instability and the possibility of job loss has increased in the 1990s. Governments, confronted with a large number of permanent layoffs each year, need to know how to respond to improve labour adjustment and the possibility of quickly finding a new job for displaced workers. Within this context, this paper uses a new longitudinal data source on the separations of workers to address three issues. First, has there in fact been an increase in the permanent layoff rate in Canada in the 1990s, as one might anticipate given concerns about rising job instability? Second, what are the underlying causes of most permanent layoffs? The paper explicitly examines the role played by cyclical variation in aggregate demand, variation in industrial demand which is often associated with structural change, and differences in layoff rates by firm size which is in turn associated with the birth and death process of firms.Third, with this as background, the core of the paper asks a question of concern to policy analysts: are most permanent layoffs rare events for workers, or are they a continuation of a pattern of repeat layoffs? This is important because a worker who is confronted with a layoff which is a rare event will require very different post-displacement adjustment assistance from someone whose history of employment has been marked with frequent layoffs, suggesting an inability to hold a job or demand-side instability in the firm or industry in which the person has worked. The workers' employment history over 10 years is used to explore the relationship between permanent layoff history and the probability of being laid off. Displaced workers are classified "low-risk", "medium-risk" and "high-risk" based on their layoff history, and multinomial logistic analysis is used to distinguish worker and firm characteristics associated with repeat layoffs or layoffs as rare even

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    File URL: http://www5.statcan.gc.ca/bsolc/olc-cel/olc-cel?catno=11F0019M1997103&lang=eng
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    Bibliographic Info

    Paper provided by Statistics Canada, Analytical Studies Branch in its series Analytical Studies Branch Research Paper Series with number 1997103e.

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    Date of creation: 12 Sep 1997
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    Handle: RePEc:stc:stcp3e:1997103e

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    Web page: http://www.statcan.gc.ca
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    Related research

    Keywords: Labour; Work transitions and life stages; Labour mobility; turnover and work absences;

    References

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    1. Rene Morissette, 1993. "Canadian Jobs and Firm Size: Do Smaller Firms Pay Less?," Canadian Journal of Economics, Canadian Economics Association, vol. 26(1), pages 159-74, February.
    2. Feldstein, Martin S, 1976. "Temporary Layoffs in the Theory of Unemployment," Journal of Political Economy, University of Chicago Press, vol. 84(5), pages 937-57, October.
    3. Hall, Robert E & Lazear, Edward P, 1984. "The Excess Sensitivity of Layoffs and Quits to Demand," Journal of Labor Economics, University of Chicago Press, vol. 2(2), pages 233-57, April.
    4. John Bound & Alan B. Krueger, 1989. "The Extent of Measurement Error In Longitudinal Earnings Data: Do Two Wrongs Make A Right?," NBER Working Papers 2885, National Bureau of Economic Research, Inc.
    5. Davis, Steven J & Haltiwanger, John C, 1992. "Gross Job Creation, Gross Job Destruction, and Employment Reallocation," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 819-63, August.
    6. Miles Corak, 1996. "Unemployment Insurance, Temporary Layoffs, and Recall Expectations," Canadian Journal of Economics, Canadian Economics Association, vol. 29(s1), pages 1-7, April.
    7. Steven J. Davis & John Haltiwanger, 1990. "Gross Job Creation and Destruction: Microeconomic Evidence and Macroeconomic Implications," NBER Chapters, in: NBER Macroeconomics Annual 1990, Volume 5, pages 123-186 National Bureau of Economic Research, Inc.
    8. Steven J. Davis & John C. Haltiwanger & Scott Schuh, 1998. "Job Creation and Destruction," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262540932, January.
    9. McLaughlin, Kenneth J, 1991. "A Theory of Quits and Layoffs with Efficient Turnover," Journal of Political Economy, University of Chicago Press, vol. 99(1), pages 1-29, February.
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