Changes in Earnings Instability and Job Loss
This paper examines the contribution of job loss or displacement to increasing male earnings instability between 1970 and 1991. Earnings instability increased among both displaced and not-displaced men, so changes associated with job loss cannot fully explain rising instability. Changes in the incidence and consequences of job loss did, however, add substantially to growing earnings instability and to the overall variance of earnings. There is evidence that displacement substantially raised earnings volatility for several years after job loss. That effect, combined with increased numbers of recently displaced workers in the 1980s relative to the previous decade, contributed to rising overall earnings instability.