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Labor turnover before plant closure: "Leaving the sinking ship" vs. "Captain throwing ballast overboard"

Listed author(s):
  • Schwerdt, Guido

Involuntary job loss in administrative data is commonly identified by exploiting the exogenous nature of mass layoffs or plant closures. However, prior knowledge can lead to selection in the labor turnover of distressed firms. This paper proposes a simple method to determine if and when selective turnover sets in. Based on a rich administrative data set for Austria, we show that separations up to two quarters before plant closure should be included in the treatment group. Moreover, we find that early leavers are associated with significantly lower costs of job loss due to plant closure.

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File URL: http://www.sciencedirect.com/science/article/pii/S0927-5371(10)00093-X
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Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 18 (2011)
Issue (Month): 1 (January)
Pages: 93-101

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Handle: RePEc:eee:labeco:v:18:y:2011:i:1:p:93-101
Contact details of provider: Web page: http://www.elsevier.com/locate/labeco

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  9. Paul A. Lengermann & Lars Vilhuber, 2002. "Abandoning the Sinking Ship: The Composition of Worker Flows Prior to Displacement," Longitudinal Employer-Household Dynamics Technical Papers 2002-11, Center for Economic Studies, U.S. Census Bureau.
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  11. Marcus Eliason & Donald Storrie, 2003. "The Echo of Job Displacement," William Davidson Institute Working Papers Series 2003-618, William Davidson Institute at the University of Michigan.
  12. Louis S. Jacobson & Robert J. LaLonde & Daniel G. Sullivan, 1993. "Long-term earnings losses of high-seniority displaced workers," Economic Perspectives, Federal Reserve Bank of Chicago, issue Nov, pages 2-20.
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  16. Schwerdt, Guido & Ichino, Andrea & Ruf, Oliver & Winter-Ebmer, Rudolf & Zweimüller, Josef, 2010. "Does the color of the collar matter? Employment and earnings after plant closure," Economics Letters, Elsevier, vol. 108(2), pages 137-140, August.
  17. Farber, Henry S., 1999. "Mobility and stability: The dynamics of job change in labor markets," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 37, pages 2439-2483 Elsevier.
  18. Fallick, Bruce Chelimsky, 1994. "The Endogeneity of Advance Notice and Fear of Destructive Attrition," The Review of Economics and Statistics, MIT Press, vol. 76(2), pages 378-384, May.
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