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Lay-Offs as Signals: The Canadian Evidence

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  • Denise J. Doiron

Abstract

In R. Gibbons and L. F. Katz (1991), the signaling content of layoffs and the resulting costs to the displaced workers are investigated. Evidence of this signaling effect is found among displaced workers in the United States. In this paper, a similar exercise is conducted using Canadian data, which are better in several respects: they provide information on union status, search activity, and more accurate measures of postdisplacement salaries and displacement length. Results show evidence of a signaling effect in white-collar occupations but not in blue-collar jobs regardless of union status. Also, signaling effects persist for the first three years in the postdisplacement job.

Suggested Citation

  • Denise J. Doiron, 1995. "Lay-Offs as Signals: The Canadian Evidence," Canadian Journal of Economics, Canadian Economics Association, vol. 28(4a), pages 899-913, November.
    • Handle: RePEc:cje:issued:v:28:y:1995:i:4a:p:899-913
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    Citations

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    Cited by:

    1. Christian Grund, 2006. "Severance payments for dismissed employees in Germany," European Journal of Law and Economics, Springer, vol. 22(1), pages 49-71, July.
    2. Silvia Mendolia, 2014. "The impact of husband’s job loss on partners’ mental health," Review of Economics of the Household, Springer, vol. 12(2), pages 277-294, June.
    3. Bauer, Thomas K. & Haisken-DeNew, John P., 2001. "Employer learning and the returns to schooling," Labour Economics, Elsevier, vol. 8(2), pages 161-180, May.
    4. Boom, Anette, 2005. "Firms' investments in general training and the skilled labour market," Labour Economics, Elsevier, vol. 12(6), pages 781-805, December.
    5. Frederiksen, Anders & Ibsen, Rikke & Rosholm, Michael & Westergaard-Nielsen, Niels, 2013. "Labour market signalling and unemployment duration: An empirical analysis using employer–employee data," Economics Letters, Elsevier, vol. 118(1), pages 84-86.
    6. Denise Doiron & Silvia Mendolia, 2012. "The impact of job loss on family dissolution," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(1), pages 367-398, January.
    7. Grund, Christian, 1999. "Stigma effects of layoffs?: Evidence from German micro-data," Economics Letters, Elsevier, vol. 64(2), pages 241-247, August.
    8. Alma Cohen, 2012. "Asymmetric Learning in Repeated Contracting: An Empirical Study," The Review of Economics and Statistics, MIT Press, vol. 94(2), pages 419-432, May.
    9. Song, Younghwan, 2007. "Recall bias in the displaced workers survey: Are layoffs really lemons?," Labour Economics, Elsevier, vol. 14(3), pages 335-345, June.
    10. Zhang, Xuelin & Morissette, Rene & Frenette, Marc, 2007. "Earnings Losses of Displaced Workers: Canadian Evidence from a Large Administrative Database on Firm Closures and Mass Layoffs," Analytical Studies Branch Research Paper Series 2007291e, Statistics Canada, Analytical Studies Branch.
    11. Becker, Sebastian & Jahn, Elke, 2015. "Labor Market Signaling and Unemployment Duration: Evidence from Germany," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112981, Verein für Socialpolitik / German Economic Association.
    12. Matthew Gray, 2000. "The Effects of Unemployment on the Earnings of Young Australians," CEPR Discussion Papers 419, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    13. Waldman, Michael, 2013. "Classic promotion tournaments versus market-based tournaments," International Journal of Industrial Organization, Elsevier, vol. 31(3), pages 198-210.
    14. Jed DeVaro & Suman Ghosh & Cindy Zoghi, 2018. "Job Characteristics and Labor Market Discrimination in Promotions," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 57(3), pages 389-434, July.
    15. Jed DeVaro & Michael Waldman, 2012. "The Signaling Role of Promotions: Further Theory and Empirical Evidence," Journal of Labor Economics, University of Chicago Press, vol. 30(1), pages 91-147.
    16. Frenette, Marc & Morissette, René & Zhang, Xuelin, 2009. "Earnings Losses of Displaced Workers: Canadian Evidence from a Large Administrative Database on Firm Closures and Mass Layoffs," CLSSRN working papers clsrn_admin-2009-51, Vancouver School of Economics, revised 25 Sep 2009.
    17. Fares, Jean & Tiongson, Erwin R., 2007. "Youth unemployment, labor market transitions, and scarring : evidence from Bosnia and Herzegovina, 2001-04," Policy Research Working Paper Series 4183, The World Bank.
    18. Appelqvist, Jukka, 2007. "Wage and Earnings Losses of Displaced Workers in Finland," Discussion Papers 422, VATT Institute for Economic Research.
    19. Michèle A. Weynandt, 2014. "Selective Firing and Lemons," NRN working papers 2014-05, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.

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