The Income Losses of Displaced Workers
We use a new, matched worker-firm dataset for the United Kingdom to estimate the income loss resulting from firm closure and mass layoffs. We track workers for up to nine years after the displacement event, and the availability of predisplacement characteristics allows us to implement difference-in-differences estimators using propensity score matching methods. Income losses during the first five years after the displacement event are in the range 18–35 percent per year for workers whose firm closes down, and 14–25 percent for workers who exit a firm which suffers a mass layoff. These losses are largely due to periods of nonemployment, which is consistent with previous work from Europe, but contrasts with that from the United States.
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- Ruhm, Christopher J, 1991. "Are Workers Permanently Scarred by Job Displacements?," American Economic Review, American Economic Association, vol. 81(1), pages 319-24, March.
- William J. Carrington, 1993. "Wage Losses for Displaced Workers: Is It Really the Firm That Matters?," Journal of Human Resources, University of Wisconsin Press, vol. 28(3), pages 435-462.
- Wachter, Till von & Bender, Stefan, 2004.
"In the Right Place at the Wrong Time: The Role of Firms and Luck in Young Workers' Careers,"
IZA Discussion Papers
1348, Institute for the Study of Labor (IZA).
- Stefan Bender & Till von Wachter, 2006. "In the Right Place at the Wrong Time: The Role of Firms and Luck in Young Workers' Careers," American Economic Review, American Economic Association, vol. 96(5), pages 1679-1705, December.
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