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The Echo of Job Displacement

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  • Marcus Eliason

    ()

  • Donald Storrie

    ()

Abstract

This paper examines whether the loss of a job increases the likelihood of future difficulties on the labour market. We study displacement resulting from all plant closures (with ten or more employees) in Sweden in 1987 and follow their labor market outcome up to 1999. The control group is extracted from a random sample of non-displaced employees by matching on propensity scores. We find a rapid and almost total initial recovery of those displaced in 1987 compared to the control group up to 1990, both with respect to employment and unemployment measures. However, with the advent of the deep recession in 1990, the two groups again diverge. There is some relative recovery in the mid to late 1990s. However, by the end of the 1990s, the echo of the job loss 13 years earlier had still not subsided. We attribute the long-term effects as being either due to recurrent loss of match-specific capital or statutory seniority lay-offs rules.

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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 2003-618.

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Length: 37 pages
Date of creation: 01 Oct 2003
Date of revision:
Handle: RePEc:wdi:papers:2003-618

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Keywords: Plant closure; displaced workers; unemployment scarring; linked employeremployee data; propensity score matching.;

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References

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  1. Robert E. Hall & Edward P. Lazear, 1982. "The Excess Sensitivity of Layoffs and Quits to Demand," NBER Working Papers 0864, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Nordström Skans, Oskar & Liljeberg, Linus, 2005. "Causal effects of subsidized career breaks," Working Paper Series, IFAU - Institute for Evaluation of Labour Market and Education Policy 2005:17, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  2. Guido Schwerdt, 2007. "Labor Turnover before Plant Closure:'Leaving the sinking ship' vs. 'Captain throwing ballast overboard'," Economics Working Papers, European University Institute ECO2007/22, European University Institute.
  3. Huttunen, Kristiina & Moen, Jarle & Salvanes, Kjell G., 2006. "How Destructive Is Creative Destruction? The Costs of Worker Displacement," IZA Discussion Papers 2316, Institute for the Study of Labor (IZA).
  4. Marcus Eliason, 2012. "Lost jobs, broken marriages," Journal of Population Economics, Springer, Springer, vol. 25(4), pages 1365-1397, October.
  5. Nordström Skans, Oskar, 2004. "Scarring effects of the first labour market experience: A sibling based analysis," Working Paper Series, IFAU - Institute for Evaluation of Labour Market and Education Policy 2004:14, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  6. Sandra E. Black & Paul J. Devereux & Kjell G. Salvanes, 2012. "Losing Heart? The Effect of Job Displacement on Health," NBER Working Papers 18660, National Bureau of Economic Research, Inc.
  7. Anders Boman, 2011. "Does migration pay? Earnings effects of geographic mobility following job displacement," Journal of Population Economics, Springer, Springer, vol. 24(4), pages 1369-1384, October.

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