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The Sources of the Wage Losses of Displaced Workers: The Role of the Reallocation of Workers into Firms, Matches, and Job Titles

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  • Pedro Raposo
  • Pedro Portugal
  • Anabela Carneiro

Abstract

We evaluate the sources of wage losses of workers displaced due to firm closure by comparison of workers’ wages before and after displacement. We decompose the sources of the wage losses into the contribution of firm, match quality, and job title fixed effects. Sorting into lower paying job titles represents the largest component of the monthly wage loss of displaced workers, accounting for 37 percent of the total average monthly wage loss compared to 31 percent for the firm and 32 percent for the match effects. With respect to the hourly wage losses, job title effects account for 46 percent of the total loss, while firm and match effects contribute in equal shares representing each 27 percent of the loss.

Suggested Citation

  • Pedro Raposo & Pedro Portugal & Anabela Carneiro, 2021. "The Sources of the Wage Losses of Displaced Workers: The Role of the Reallocation of Workers into Firms, Matches, and Job Titles," Journal of Human Resources, University of Wisconsin Press, vol. 56(3), pages 786-820.
    • Handle: RePEc:uwp:jhriss:v:56:y:2021:i:3:p:786-820
    Note: DOI: 10.3368/jhr.56.3.0317-8667R3
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    Citations

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    Cited by:

    1. Marta Silva & José Garcia-Louzão, 2021. "Coworker Networks and the Labor Market Outcomes of Displaced Workers: Evidence from Portugal," Working Papers w202121, Banco de Portugal, Economics and Research Department.
    2. Antoine Bertheau & Edoardo Maria Acabbi & Cristina Barceló & Andreas Gulyas & Stefano Lombardi & Raffaele Saggio, 2023. "The Unequal Consequences of Job Loss across Countries," American Economic Review: Insights, American Economic Association, vol. 5(3), pages 393-408, September.
    3. Ria Ivandic & Anne Sophie Lassen, 2023. "Gender Gaps From Labor Market Shocks," Upjohn Working Papers 23-387, W.E. Upjohn Institute for Employment Research.
    4. Ria Ivandic & Anne Sophie Lassen, 2023. "Gender gaps from labor market shocks," CEP Discussion Papers dp1944, Centre for Economic Performance, LSE.
    5. Nils Braakmann & Wessel N. Vermeulen, 2023. "Do mass layoffs affect voting behaviour? Evidence from the UK," British Journal of Industrial Relations, London School of Economics, vol. 61(4), pages 922-950, December.
    6. Carneiro, Anabela & Portugal, Pedro & Raposo, Pedro & Rodrigues, Paulo M.M., 2023. "The persistence of wages," Journal of Econometrics, Elsevier, vol. 233(2), pages 596-611.
    7. Pedro Portugal, 2020. "The sources of wage variability in Portugal: a binge reading survey," Economic Bulletin and Financial Stability Report Articles and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.
    8. Jon Ellingsen & Caroline Espegren, 2022. "Lost in transition? Earnings losses of displaced petroleum workers," Working Papers No 06/2022, Centre for Applied Macro- and Petroleum economics (CAMP), BI Norwegian Business School.
    9. Sónia Cabral & Pedro S. Martins & João Pereira dos Santos & Mariana Tavares, 2021. "Collateral Damage? Labour Market Effects of Competing with China—at Home and Abroad," Economica, London School of Economics and Political Science, vol. 88(350), pages 570-600, April.
    10. Juan-Pablo Rud & Michael Simmons & Gerhard Toews & Fernando Aragon, 2022. "Job Displacement Costs of Phasing out Coal," Working Papers 184, Red Nacional de Investigadores en Economía (RedNIE).
    11. Benedikt Schröpf, 2023. "The dynamics of wage dispersion between firms: the role of firm entry and exit," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 57(1), pages 1-29, December.
    12. Ivandic, Ria & Lassen, Anne Sophie, 2023. "Gender gaps from labor market shocks," LSE Research Online Documents on Economics 121285, London School of Economics and Political Science, LSE Library.
    13. Hugo Castro-Silva & Francisco Lima, 2023. "The struggle of small firms to retain high-skill workers: job duration and the importance of knowledge intensity," Small Business Economics, Springer, vol. 60(2), pages 537-572, February.
    14. Ivan Lagrosa, 2022. "Income dynamics in dual labor markets," Working Papers wp2022_2209, CEMFI.
    15. Ivandić, Ria & Lassen, Anne Sophie, 2023. "Gender gaps from labor market shocks," Labour Economics, Elsevier, vol. 83(C).

    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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