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The costs of defense-related layoffs in New England


  • Yolanda K. Kodrzycki


Since the late 1980s, declines in defense spending have resulted in dramatic employment reductions in defense-related sectors of the economy. Although considerable information exists on the fate of major defense contractors and military bases in New England, little is known about what has happened to laid-off defense workers.> This article reviews the distinctive features of life insurance companies and how they have reshaped their liabilities and restructured their assets in order to cope with the consequences of rising interest rates and increasing competition for savings during the past three decades. The author analyzes the consequences of these financial innovations for the capital of the industry as well as the distribution of capital among life companies, and goes on to examine the issues relevant for measuring and controlling the capital of life companies. He concludes that prudent standards for capital should take into account an insurance company's entire balance sheet, not just its holdings of risky assets. Marking only risky assets according to their disposal values, while reporting other assets and liabilities according to other rules, can greatly misstate the financial condition of life insurance companies. And to the degree that financial intermediaries increasingly favor more familiar assets, the role of nonfinancial corporations as financial intermediaries will continue to expand.

Suggested Citation

  • Yolanda K. Kodrzycki, 1995. "The costs of defense-related layoffs in New England," New England Economic Review, Federal Reserve Bank of Boston, issue Mar, pages 3-23.
  • Handle: RePEc:fip:fedbne:y:1995:i:mar:p:3-23

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    References listed on IDEAS

    1. Kim B. Clark & Lawrence H. Summers, 1979. "Labor Market Dynamics and Unemployemnt: A Reconsideration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 10(1), pages 13-72.
    2. Blanchard, Olivier J, 1984. "The Lucas Critique and the Volcker Deflation," American Economic Review, American Economic Association, vol. 74(2), pages 211-215, May.
    3. George L. Perry, 1970. "Changing Labor Markets and Inflation," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 1(3), pages 411-448.
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    Cited by:

    1. William J. Carrington, 2015. "Do We Know Why Earnings Fall with Job Displacement? Working Paper: 2015-01," Working Papers 49908, Congressional Budget Office.
    2. Yolanda Kodrzycki, 2007. "Using unexpected recalls to examine the long-term earnings effects of job displacement," Working Papers 07-2, Federal Reserve Bank of Boston.
    3. Yolanda K. Kodrzycki, 1997. "Training programs for displaced workers: what do they accomplish?," New England Economic Review, Federal Reserve Bank of Boston, issue May, pages 39-57.
    4. Patricia M. Flynn & Ross J. Gittell & Norman H. Sedgley, 1999. "New England as the twenty-first century approaches: no time for complacency," New England Economic Review, Federal Reserve Bank of Boston, issue Nov, pages 41-53.
    5. repec:bla:indres:v:56:y:2017:i:4:p:688-722 is not listed on IDEAS
    6. Carrington, William J. & Fallick, Bruce C., 2014. "Why Do Earnings Fall with Job Displacement?," Working Paper 1405, Federal Reserve Bank of Cleveland.


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