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Earnings Losses of Displaced Older Workers: Accounting for the Retirement Option

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  • Schirle, Tammy

Abstract

In this paper I estimate the magnitude of earnings losses faced by workers who are displaced when over the age of 50. This is potentially complicated by the self-selection of older individuals out of the labour force and into activities such as retirement, preventing observation of their potential earnings losses. Using data from the Survey of Labour and Income Dynamics (1993-2004), I use a Heckman selection model that accounts for individuals’ departure from the labour force following displacement. Results indicate that self-selection is an important factor to consider when studying the earnings of older workers but does not bias estimates of earnings losses due to displacement. Further, the results suggest that workers over 50 do not face larger earnings losses upon displacement than 35-49 year olds. Losses are only slightly larger than that experienced by 25-34 year olds. Consistent with the existing literature, those workers displaced over 50 with high tenure on the lost job experience the largest earnings losses.

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Bibliographic Info

Paper provided by Vancouver School of Economics in its series CLSSRN working papers with number clsrn_admin-2009-17.

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Length: 37 pages
Date of creation: 16 Feb 2009
Date of revision: 16 Feb 2009
Handle: RePEc:ubc:clssrn:clsrn_admin-2009-17

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Web page: http://www.clsrn.econ.ubc.ca/

Related research

Keywords: Layoffs; Wage Level; Wage Structure; Retirement; Retirement Policies;

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Cited by:
  1. Riddell, W. Craig, 2011. "Unemployment Compensation and Adjustment Assistance for Displaced Workers: Policy Options for Canada," CLSSRN working papers, Vancouver School of Economics clsrn_admin-2011-31, Vancouver School of Economics, revised 22 Dec 2011.
  2. Jones, Stephen, 2012. "The Effectiveness of Training for Displaced Workers with Long Prior Job Tenure," CLSSRN working papers, Vancouver School of Economics clsrn_admin-2012-3, Vancouver School of Economics, revised 29 Jan 2012.

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