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Labor Market Dynamics and Wage Losses of Displaced Workers in France and the United States

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  • Arnaud Lefranc

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Abstract

The objective of this paper is to provide a comparative assessment of the consequences of worker displacement in France and the United States. I estimate wage losses of displaced workers in the two countries and examine the relative contribution of two important sources of post-displacement wage adjustments. The first one relates to the loss of seniority-accumulated firmspecific earnings potential. The second one arises from match heterogeneity. Identification of the relative contribution of these two sources can be achieved given separate estimates of returns to seniority. I show that, while the order of magnitude of total wage losses are comparable in the two economies (10 to 15%), the sources of wage adjustments di_er strongly: all of the wage decline in France seems to be due to the loss of accumulated firm-specific earnings potential, while in the US, more than half of measured wage losses arise from a downgrading of displaced workers into lower quality job matches.

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Bibliographic Info

Paper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number 2003-614.

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Length: 48 pages
Date of creation: 01 Sep 2003
Date of revision:
Handle: RePEc:wdi:papers:2003-614

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Keywords: Wage losses; Unemployment; Displaced workers; Returns to seniority; Match heterogeneity;

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References

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Citations

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Cited by:
  1. Lalé, Etienne, 2012. "Trends in occupational mobility in France: 1982–2009," Labour Economics, Elsevier, vol. 19(3), pages 373-387.
  2. Wasmer, Etienne, 2002. "Interpreting Europe and US Labor Markets Differences: The Specificity of Human Capital Investments," IZA Discussion Papers 549, Institute for the Study of Labor (IZA).
  3. Amynah Vanessa Gangji & Robert Plasman, 2007. "The Matthew effect of unemployment: how does it affect wages in Belgium," DULBEA Working Papers 07-19.RS, ULB -- Universite Libre de Bruxelles.
  4. Anil Duman, 2010. "Risks in the labor market and social insurance preferences: Germany and the USA," International Journal of Social Economics, Emerald Group Publishing, vol. 37(2), pages 150-164, January.
  5. Carneiro, Anabela & Portugal, Pedro, 2006. "Earnings Losses of Displaced Workers: Evidence from a Matched Employer-Employee Data Set," IZA Discussion Papers 2289, Institute for the Study of Labor (IZA).
  6. Alain Delacroix & Etienne Wasmer, 2007. "Job and Workers Flows in Europe and the US: Specific Skills or Employment Protection?. Midwest Macroeconomics Meetings 2007, April 27-29, 2007, Cleveland, Ohio," Sciences Po publications info:hdl:2441/9938, Sciences Po.
  7. Barry, Frank & Walsh, Frank, 2008. "Gains and losses from sectoral relocation: A review of theory and empirics," Structural Change and Economic Dynamics, Elsevier, vol. 19(1), pages 4-16, March.
  8. Ana Lamo & Peter Fredriksson & Julian Messina & Giovanni Peri & Etienne Wasmer, 2005. "The Macroeconomics of Education," Sciences Po publications info:hdl:2441/9064, Sciences Po.
  9. Anja Deelen, 2011. "Wage-Tenure Profiles and Mobility," CPB Discussion Paper 198, CPB Netherlands Bureau for Economic Policy Analysis.
  10. Julie L. Hotchkiss & M. Melinda Pitts & John C. Robertson, 2004. "Wage gains among job changers across the business cycle:> insight from state administrative data," Working Paper 2004-19, Federal Reserve Bank of Atlanta.

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