IDEAS home Printed from https://ideas.repec.org/a/bla/labour/v34y2020i3p239-276.html
   My bibliography  Save this article

Who Buffers Income Losses after Job Displacement? The Role of Alternative Income Sources, the Family, and the State

Author

Listed:
  • Daniel Fackler
  • Eva Weigt

Abstract

Using survey data from the German Socio‐Economic Panel (SOEP), this paper analyses the extent to which alternative income sources, reactions within the household context, and redistribution by the state attenuate earnings losses after job displacement. Applying propensity score matching and fixed effects estimations, we find that income from self‐employment reduces the earnings gap only slightly and severance payments buffer losses in the short run. On the household level, we find little evidence for an added worker effect whereas redistribution by the state within the tax and transfer system mitigates income losses substantially.

Suggested Citation

  • Daniel Fackler & Eva Weigt, 2020. "Who Buffers Income Losses after Job Displacement? The Role of Alternative Income Sources, the Family, and the State," LABOUR, CEIS, vol. 34(3), pages 239-276, September.
  • Handle: RePEc:bla:labour:v:34:y:2020:i:3:p:239-276
    DOI: 10.1111/labr.12170
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/labr.12170
    Download Restriction: no

    File URL: https://libkey.io/10.1111/labr.12170?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Emilia Del Bono & Andrea Weber & Rudolf Winter-Ebmer, 2012. "Clash Of Career And Family: Fertility Decisions After Job Displacement," Journal of the European Economic Association, European Economic Association, vol. 10(4), pages 659-683, August.
    2. Fackler, Daniel & Stegmaier, Jens & Weigt, Eva, 2019. "Does extended unemployment benefit duration ameliorate the negative employment effects of job loss?," Labour Economics, Elsevier, vol. 59(C), pages 123-138.
    3. Gibbons, Robert & Katz, Lawrence F, 1991. "Layoffs and Lemons," Journal of Labor Economics, University of Chicago Press, vol. 9(4), pages 351-380, October.
    4. Aaron Flaaen & Matthew D. Shapiro & Isaac Sorkin, 2019. "Reconsidering the Consequences of Worker Displacements: Firm versus Worker Perspective," American Economic Journal: Macroeconomics, American Economic Association, vol. 11(2), pages 193-227, April.
    5. Kristiina Huttunen & Jarle Møen & Kjell G. Salvanes, 2018. "Job Loss and Regional Mobility," Journal of Labor Economics, University of Chicago Press, vol. 36(2), pages 479-509.
    6. Marcus, Jan, 2013. "The effect of unemployment on the mental health of spouses – Evidence from plant closures in Germany," Journal of Health Economics, Elsevier, vol. 32(3), pages 546-558.
    7. Martin Halla & Julia Schmieder & Andrea Weber, 2020. "Job Displacement, Family Dynamics, and Spousal Labor Supply," American Economic Journal: Applied Economics, American Economic Association, vol. 12(4), pages 253-287, October.
    8. Chad Syverson, 2011. "What Determines Productivity?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 326-365, June.
    9. Doreen Triebe, 2015. "The Added Worker Effect Differentiated by Gender and Partnership Status: Evidence from Involuntary Job Loss," SOEPpapers on Multidisciplinary Panel Data Research 740, DIW Berlin, The German Socio-Economic Panel (SOEP).
    10. Kenneth A. Couch, 2001. "Earnings Losses and Unemployment of Displaced Workers in Germany," ILR Review, Cornell University, ILR School, vol. 54(3), pages 559-572, April.
    11. Daniel Fackler & Lisa Rippe, 2017. "Losing Work, Moving Away? Regional Mobility After Job Loss," LABOUR, CEIS, vol. 31(4), pages 457-479, December.
    12. Melvin Stephens, 2002. "Worker Displacement and the Added Worker Effect," Journal of Labor Economics, University of Chicago Press, vol. 20(3), pages 504-537, July.
    13. Daniel Fackler & Claus Schnabel & Joachim Wagner, 2013. "Establishment exits in Germany: the role of size and age," Small Business Economics, Springer, vol. 41(3), pages 683-700, October.
    14. Kristiina Huttunen & Jenni Kellokumpu, 2016. "The Effect of Job Displacement on Couples' Fertility Decisions," Journal of Labor Economics, University of Chicago Press, vol. 34(2), pages 403-442.
    15. Schmieder, Johannes F. & Wachter, Till von & Bender, Stefan, 2010. "The long-term impact of job displacement in Germany during the 1982 recession on earnings, income, and employment," IAB-Discussion Paper 201001, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    16. Marco Caliendo & Sabine Kopeinig, 2008. "Some Practical Guidance For The Implementation Of Propensity Score Matching," Journal of Economic Surveys, Wiley Blackwell, vol. 22(1), pages 31-72, February.
    17. Julia Bredtmann & Sebastian Otten & Christian Rulff, 2014. "Husband’s Unemployment and Wife’s Labor Supply – The Added Worker Effect across Europe," Economics Working Papers 2014-13, Department of Economics and Business Economics, Aarhus University.
    18. Burda, Michael C. & Mertens, Antje, 2001. "Estimating wage losses of displaced workers in Germany," Labour Economics, Elsevier, vol. 8(1), pages 15-41, January.
    19. Philip Oreopoulos & Marianne Page & Ann Huff Stevens, 2008. "The Intergenerational Effects of Worker Displacement," Journal of Labor Economics, University of Chicago Press, vol. 26(3), pages 455-483, July.
    20. François Rycx & David Marsden, 2010. "Wage structures, employment adjustments and globalisation: evidence from linked and firm-level panel data sets," ULB Institutional Repository 2013/13446, ULB -- Universite Libre de Bruxelles.
    21. Grund, Christian, 1999. "Stigma effects of layoffs?: Evidence from German micro-data," Economics Letters, Elsevier, vol. 64(2), pages 241-247, August.
    22. Christian Grund, 2006. "Severance payments for dismissed employees in Germany," European Journal of Law and Economics, Springer, vol. 22(1), pages 49-71, July.
    23. Daniel Sullivan & Till von Wachter, 2009. "Job Displacement and Mortality: An Analysis Using Administrative Data," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(3), pages 1265-1306.
    24. Inés Hardoy & Pål Schøne, 2014. "Displacement and household adaptation: insured by the spouse or the state?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 27(3), pages 683-703, July.
    25. Serdar Birinci, 2019. "Spousal Labor Supply Response to Job Displacement and Implications for Optimal Transfers," Working Papers 2019-020, Federal Reserve Bank of St. Louis, revised 25 Sep 2021.
    26. Sandra E. Black & Paul J. Devereux & Kjell G. Salvanes, 2015. "Losing Heart? The Effect of Job Displacement on Health," ILR Review, Cornell University, ILR School, vol. 68(4), pages 833-861, August.
    27. Schwerdt, Guido, 2011. "Labor turnover before plant closure: "Leaving the sinking ship" vs. "Captain throwing ballast overboard"," Labour Economics, Elsevier, vol. 18(1), pages 93-101, January.
    28. Julia Bredtmann & Sebastian Otten & Christian Rulff, 2018. "Husband’s Unemployment and Wife’s Labor Supply: The Added Worker Effect across Europe," ILR Review, Cornell University, ILR School, vol. 71(5), pages 1201-1231, October.
    29. Marcus Eliason, 2011. "Income after job loss: the role of the family and the welfare state," Applied Economics, Taylor & Francis Journals, vol. 43(5), pages 603-618.
    30. Alexander Hijzen & Richard Upward & Peter W. Wright, 2010. "The Income Losses of Displaced Workers," Journal of Human Resources, University of Wisconsin Press, vol. 45(1).
    31. Lundberg, Shelly, 1985. "The Added Worker Effect," Journal of Labor Economics, University of Chicago Press, vol. 3(1), pages 11-37, January.
    32. Dietz, Martin & Walwei, Ulrich, 2011. "Germany - no country for old workers?," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 44(4), pages 363-376.
    33. William J. Carrington & Bruce Fallick, 2017. "Why Do Earnings Fall with Job Displacement?," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 56(4), pages 688-722, October.
    34. Marcus Eliason & Donald Storrie, 2006. "Lasting or Latent Scars? Swedish Evidence on the Long-Term Effects of Job Displacement," Journal of Labor Economics, University of Chicago Press, vol. 24(4), pages 831-856, October.
    35. Nathaniel G. Hilger, 2016. "Parental Job Loss and Children's Long-Term Outcomes: Evidence from 7 Million Fathers' Layoffs," American Economic Journal: Applied Economics, American Economic Association, vol. 8(3), pages 247-283, July.
    36. Harry Krashinsky, 2002. "Evidence on Adverse Selection and Establishment Size in the Labor Market," ILR Review, Cornell University, ILR School, vol. 56(1), pages 84-96, October.
    37. Gert G. Wagner & Joachim R. Frick & Jürgen Schupp, 2007. "The German Socio-Economic Panel Study (SOEP) – Scope, Evolution and Enhancements," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 127(1), pages 139-169.
    38. Kristiina Huttunen & Jarle Møen & Kjell G. Salvanes, 2011. "How Destructive Is Creative Destruction? Effects Of Job Loss On Job Mobility, Withdrawal And Income," Journal of the European Economic Association, European Economic Association, vol. 9(5), pages 840-870, October.
    39. Peter J. Kuhn (ed.), 2002. "Losing Work, Moving On: International Perspectives on Worker Displacement," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number lwmo, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hannah Illing & Johannes Schmieder & Simon Trenkle, "undated". "The Gender Gap in Earnings Losses After Job Displacement," CRC TR 224 Discussion Paper Series crctr224_2022_381, University of Bonn and University of Mannheim, Germany.
    2. Robert J. Klein & Michelle M. Englund, 2021. "Developmental Pathways to Adult Happiness: Social Competence and Timely High School Graduation," Journal of Happiness Studies, Springer, vol. 22(7), pages 3023-3041, October.
    3. Mattis Beckmannshagen & Rick Glaubitz, 2023. "Is There a Desired Added Worker Effect?: Evidence from Involuntary Job Losses," SOEPpapers on Multidisciplinary Panel Data Research 1200, DIW Berlin, The German Socio-Economic Panel (SOEP).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Fackler, Daniel & Hank, Eva, 2016. "Who buffers income losses after job displacement? The role of alternative income sources, the family, and the state," IWH Discussion Papers 28/2016, Halle Institute for Economic Research (IWH).
    2. Daniel Fackler & Eva Hank, 2016. "Who Buffers Income Losses after Job Displacement? The Role of Alternative Income Sources, the Family, and the State," SOEPpapers on Multidisciplinary Panel Data Research 863, DIW Berlin, The German Socio-Economic Panel (SOEP).
    3. Hank, Eva & Fackler, Daniel, 2017. "Who buffers income losses after job displacement? The role of alternative income sources, the family, and the state," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168098, Verein für Socialpolitik / German Economic Association.
    4. Gathmann, Christina & Huttunen, Kristiina & Jernström, Laura & Sääksvuori, Lauri & Stitzing, Robin, 2020. "In Sickness and in Health: Job Displacement and Health. Spillovers in Couples," Working Papers 133, VATT Institute for Economic Research.
    5. Marcus Eliason, 2012. "Lost jobs, broken marriages," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(4), pages 1365-1397, October.
    6. Neffke, Frank & Nedelkoska, Ljubica & Wiederhold, Simon, 2024. "Skill mismatch and the costs of job displacement," Research Policy, Elsevier, vol. 53(2).
    7. Fackler, Daniel & Müller, Steffen & Stegmaier, Jens, 2017. "Explaining wage losses after job displacement: Employer size and lost firm rents," IWH Discussion Papers 32/2017, Halle Institute for Economic Research (IWH).
    8. Schone, Pal & Strom, Marte, 2019. "International Labor Market Competition and Spousal Labor Supply Responses," IZA Discussion Papers 12857, Institute of Labor Economics (IZA).
    9. Gathmann, Christina & Huttunen, Kristiina & Jenström, Laura & Saaksvuori, Lauri & Stitzing, Robin, 2020. "Job Loss and Health Spillovers in the Family," VfS Annual Conference 2020 (Virtual Conference): Gender Economics 224634, Verein für Socialpolitik / German Economic Association.
    10. Martin Halla & Julia Schmieder & Andrea Weber, 2020. "Job Displacement, Family Dynamics, and Spousal Labor Supply," American Economic Journal: Applied Economics, American Economic Association, vol. 12(4), pages 253-287, October.
    11. Daniel Fackler & Lisa Rippe, 2016. "Losing Work, Moving away? Regional Mobility after Job Loss," SOEPpapers on Multidisciplinary Panel Data Research 861, DIW Berlin, The German Socio-Economic Panel (SOEP).
    12. Fackler, Daniel & Rippe, Lisa, 2016. "Losing work, moving away? Regional mobility after job loss," IWH Discussion Papers 26/2016, Halle Institute for Economic Research (IWH).
    13. William J. Carrington & Bruce Fallick, 2017. "Why Do Earnings Fall with Job Displacement?," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 56(4), pages 688-722, October.
    14. Daniel Fackler & Lisa Rippe, 2017. "Losing Work, Moving Away? Regional Mobility After Job Loss," LABOUR, CEIS, vol. 31(4), pages 457-479, December.
    15. Meekes, Jordy & Hassink, Wolter, 2020. "Fired and Pregnant: Gender Differences in Job Flexibility Outcomes after Job Loss," IZA Discussion Papers 13779, Institute of Labor Economics (IZA).
    16. Schøne, Pål & Strøm, Marte, 2021. "International labor market competition and wives’ labor supply responses," Labour Economics, Elsevier, vol. 70(C).
    17. William J. Carrington & Bruce Fallick, 2014. "Why Do Earnings Fall with Job Displacement?," Working Papers (Old Series) 1405, Federal Reserve Bank of Cleveland.
    18. Dahlberg, Matz & Martén, Linna & Öckert, Björn, 2021. "Who recovers from a job loss? The importance of cognitive and non-cognitive skills," Working Paper Series 2021:2, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    19. William J. Carrington, 2015. "Do We Know Why Earnings Fall with Job Displacement? Working Paper: 2015-01," Working Papers 49908, Congressional Budget Office.
    20. Richard Upward & Peter Wright, 2015. "Don’t Look Down: New Evidence on Job Loss in a Flexible Labour Market," Discussion Papers 2015-10, University of Nottingham, GEP.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:labour:v:34:y:2020:i:3:p:239-276. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley-Blackwell Digital Licensing or Christopher F. Baum (email available below). General contact details of provider: https://edirc.repec.org/data/csrotit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.