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Earnings losses of job losers during the 2001 economic downturn


  • Shigeru Fujita
  • Vilas Rao


Job losses may involve not only lost earnings during unemployment but also declines in earnings at subsequent jobs. After a time consuming job search, workers may need to restart their careers from scratch, accepting a lower wage. Workers may also need time to acquire new skills, and total earnings lost during such a period of re-adjustment can be considerable. But experiences may vary widely. In this article, using a novel data set, Shigeru Fujita and Vilas Rao provide evidence on earnings losses after unemployment. Although the usefulness of the evidence is limited by the short sample period, the data set allows us to ask some important questions, the answers to which may help inform us about important macroeconomic issues such as the cost of business-cycle fluctuations and the benefits of policies intended to avoid such fluctuations.

Suggested Citation

  • Shigeru Fujita & Vilas Rao, 2009. "Earnings losses of job losers during the 2001 economic downturn," Business Review, Federal Reserve Bank of Philadelphia, issue Q4, pages 1-9.
  • Handle: RePEc:fip:fedpbr:y:2009:i:q4:p:1-9

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    Cited by:

    1. Jung, Philip & Kuester, Keith, 2011. "The (un)importance of unemployment fluctuations for the welfare cost of business cycles," Journal of Economic Dynamics and Control, Elsevier, vol. 35(10), pages 1744-1768, October.
    2. Shigeru Fujita, 2012. "Labor market anxiety and the downward trend in the job separation rate," Business Review, Federal Reserve Bank of Philadelphia, issue Q4, pages 1-7.

    More about this item


    Recessions ; Unemployment ; Wages;


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