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Two-Sided Learning with Applications to Labor Turnover and Worker Displacement

Author

Listed:
  • Pfann Gerard A.

    () (Department of Quantitative Economics, Department of Organization & Strategy, Faculty of Economics and Business Administration, Maastricht University, P.O. Box 6 16, 6200 MD Maastricht, The Netherlands)

  • Hamermesh Daniel S.

    () (Sue Killam Professor in the Foundations of Economics, University of Texas at Austin, Austin, TX 78712-1173, USA)

Abstract

We make several extensions to the recent literature on job loss while modernizing the very early job-displacement literature. After constructing a dynamic model of two-sided learning between a firm and its workers, we estimate it using personnel data from Fokker Aircraft that cover the path of layoffs and quits through its bankruptcy in March 1996. We find that the firm learns about workers' loyalty (demonstrating the role of information in repeated cooperative principal- agent relationships), while workers do not learn (consistent with earlier empirical results on American workers). The type of data that we use also generates information on the value of learning and on whether and how the characteristics of workers who remain until the firm's death differ from those of all affected workers. It thus allows us to measure the increases in the firm's value from learning about its workers' behavior and to infer the extent of biases in estimating losses from displacement from samples restricted to displaced workers.

Suggested Citation

  • Pfann Gerard A. & Hamermesh Daniel S., 2008. "Two-Sided Learning with Applications to Labor Turnover and Worker Displacement," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 228(5-6), pages 423-445, October.
  • Handle: RePEc:jns:jbstat:v:228:y:2008:i:5-6:p:423-445
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    References listed on IDEAS

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    Cited by:

    1. Henry Ohlsson & Donald Storrie, 2012. "Long-term effects of public policy for displaced workers in Sweden: Shipyard workers in the west and miners in the north," International Journal of Manpower, Emerald Group Publishing, vol. 33(5), pages 514-538, August.
    2. Daniel Fackler & Claus Schnabel & Joachim Wagner, 2014. "Lingering illness or sudden death? Pre-exit employment developments in German establishments," Industrial and Corporate Change, Oxford University Press, vol. 23(4), pages 1121-1140.
    3. Fackler, Daniel & Müller, Steffen & Stegmaier, Jens, 2016. "Plant-level employment development before collective displacements: Comparing mass layoffs, plant closures, and bankruptcies," IWH Discussion Papers 27/2016, Halle Institute for Economic Research (IWH).

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    Keywords

    Learning; job loss; quits; layoffs;

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