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How do firms interpret a job loss? Evidence from the National Longitudinal Survey of Youth

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  • Stephen M. Kosovich

    () (Stephen F. Austin State University)

Abstract

Empirical studies in the job displacement literature have found that workers face significant earnings losses on average, when they are permanently displaced from jobs. Previous research also suggests that the costliness of job loss varies widely. Gibbons and Katz (1991) develop and test a theoretical model in which layoffs provide the market with information concerning the quality of laid off workers, while plant and firm closings do not. Using data from the National Longitudinal Survey of Youth, this paper tests a model that describes how firms can use additional information about job losses to determine worker quality. The results suggest that workers face the most stigma from very recent and uncommon job losses.

Suggested Citation

  • Stephen M. Kosovich, 2009. "How do firms interpret a job loss? Evidence from the National Longitudinal Survey of Youth," Economics Bulletin, AccessEcon, vol. 29(2), pages 1070-1086.
  • Handle: RePEc:ebl:ecbull:eb-09-00199
    as

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    References listed on IDEAS

    as
    1. Gibbons, Robert & Katz, Lawrence F, 1991. "Layoffs and Lemons," Journal of Labor Economics, University of Chicago Press, vol. 9(4), pages 351-380, October.
    2. Nakamura, Emi, 2008. "Layoffs and lemons over the business cycle," Economics Letters, Elsevier, vol. 99(1), pages 55-58, April.
    3. Ruhm, Christopher J, 1991. "Are Workers Permanently Scarred by Job Displacements?," American Economic Review, American Economic Association, vol. 81(1), pages 319-324, March.
    4. Henry S. Farber, 1997. "The Changing Face of Job Loss in the United States, 1981-1995," Working Papers 761, Princeton University, Department of Economics, Industrial Relations Section..
    5. 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.
    6. Lori G. Kletzer & Robert W. Fairlie, 2003. "The Long-Term Costs of Job Displacement for Young Adult Workers," ILR Review, Cornell University, ILR School, vol. 56(4), pages 682-698, July.
    7. Thomas MaCurdy & Thomas Mroz & R. Mark Gritz, 1998. "An Evaluation of the National Longitudinal Survey on Youth," Journal of Human Resources, University of Wisconsin Press, vol. 33(2), pages 345-436.
    8. Jacobson, Louis S & LaLonde, Robert J & Sullivan, Daniel G, 1993. "Earnings Losses of Displaced Workers," American Economic Review, American Economic Association, vol. 83(4), pages 685-709, September.
    9. George Akerlof, 1976. "The Economics of Caste and of the Rat Race and Other Woeful Tales," The Quarterly Journal of Economics, Oxford University Press, vol. 90(4), pages 599-617.
    10. Stevens, Ann Huff, 1997. "Persistent Effects of Job Displacement: The Importance of Multiple Job Losses," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages 165-188, January.
    11. Lori G. Kletzer, 1998. "Job Displacement," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 115-136, Winter.
    12. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, Oxford University Press, vol. 87(3), pages 355-374.
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    More about this item

    Keywords

    labor economics; job loss; job displacement; unemployment; layoffs;

    JEL classification:

    • J0 - Labor and Demographic Economics - - General

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