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How Do Families and Unattached Individuals Respond to Layoffs? Evidence from Canada

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Author Info
Morissette, René
Ostrovsky, Yuri
Abstract

Using data from a large Canadian longitudinal dataset, we examine whether earnings of wives and teenagers increase in response to layoffs experienced by husbands. We find virtually no evidence of an "added worker effect" for the earnings of teenagers. However, we find that among families with no children of working age, wives' earnings offset about one fifth of the earnings losses experienced by husbands five years after the layoff. We also contrast the long-term earnings losses experienced by husbands and unattached males. Even though the former group might be less mobile geographically than the latter, we find that both groups experience roughly the same earnings losses in the long run. Furthermore, the income losses (before tax and after tax) of both groups are also very similar. However, because unattached males have much lower pre-layoff income, they experience much greater relative income shocks than (families of) laid-off husbands.

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File URL: http://www.statcan.gc.ca/bsolc/olc-cel/olc-cel?catno=11F0019M2008304&lang=eng
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Paper provided by Statistics Canada, Analytical Studies Branch in its series Analytical Studies Branch Research Paper Series with number 2008304e.

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Date of creation: 21 Feb 2008
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Handle: RePEc:stc:stcp3e:2008304e

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Keywords: Labour; Employment and unemployment; Wages; salaries and other earnings; Employment insurance; social assistance and other transfers;

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  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.
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  7. 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)
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  8. Ann Huff Stevens, 2001. "Changes in earnings instability and job loss," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 55(1), pages 60-78, October.
  9. Stevens, Ann Huff, 1997. "Persistent Effects of Job Displacement: The Importance of Multiple Job Losses," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages 165-88, January. [Downloadable!] (restricted)
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  12. Cullen, Julie Berry & Gruber, Jonathan, 2000. "Does Unemployment Insurance Crowd Out Spousal Labor Supply?," Journal of Labor Economics, University of Chicago Press, vol. 18(3), pages 546-72, July. [Downloadable!] (restricted)
  13. 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.).
  14. Even, William E & Macpherson, David A, 1990. "The Gender Gap in Pensions and Wages," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 259-65, May. [Downloadable!] (restricted)
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