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Estimating the "True" Cost of Job Loss: Evidence Using Matched Data from Califormia 1991-2000

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  • Till von Wachter
  • Elizabeth Handwerker
  • Andrew Hildreth

Abstract

Estimates of the cost of job displacement from survey and administrative data differ markedly. This paper uses a unique match of data between the Displaced Worker Survey (DWS) and administrative wage records from California to examine the sources of this discrepancy. When we use similar estimation methods and account for measurement error in survey wages correlated with worker demographics, estimates of earnings losses at displacement are similar from both datasets and significantly larger than those based on the DWS alone. Also correcting for measurement errors in reported displacements suggests both sources of such estimates may yield lower bounds for the true cost of displacement.

Suggested Citation

  • Till von Wachter & Elizabeth Handwerker & Andrew Hildreth, 2009. "Estimating the "True" Cost of Job Loss: Evidence Using Matched Data from Califormia 1991-2000," Working Papers 09-14, Center for Economic Studies, U.S. Census Bureau.
    • Handle: RePEc:cen:wpaper:09-14
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    References listed on IDEAS

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    2. William J. Carrington, 2015. "Do We Know Why Earnings Fall with Job Displacement? Working Paper: 2015-01," Working Papers 49908, Congressional Budget Office.
    3. Benjamin J. Keys, 2018. "The Credit Market Consequences of Job Displacement," The Review of Economics and Statistics, MIT Press, vol. 100(3), pages 405-415, July.
    4. Richard Upward & Peter Wright, 2015. "Don’t Look Down: New Evidence on Job Loss in a Flexible Labour Market," Discussion Papers 2015-10, University of Nottingham, GEP.
    5. Aaron Flaaen & Matthew D. Shapiro & Isaac Sorkin, 2019. "Reconsidering the Consequences of Worker Displacements: Firm versus Worker Perspective," American Economic Journal: Macroeconomics, American Economic Association, vol. 11(2), pages 193-227, April.
    6. William J. Carrington & Bruce Fallick, 2017. "Why Do Earnings Fall with Job Displacement?," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 56(4), pages 688-722, October.
    7. Laura Kawano & Sara LaLumia, 2017. "How Income Changes During Unemployment: Evidence from Tax Return Data," Journal of Human Resources, University of Wisconsin Press, vol. 52(2), pages 418-456.
    8. Seim, David, 2019. "On the incidence and effects of job displacement: Evidence from Sweden," Labour Economics, Elsevier, vol. 57(C), pages 131-145.
    9. Santos Raposo, P.M., 2013. "Flexibility of the labor market," Other publications TiSEM 4ff5f841-0e7a-4066-93a8-a, Tilburg University, School of Economics and Management.
    10. Katharine G. Abraham & John Haltiwanger & Kristin Sandusky & James R. Spletzer, 2013. "Exploring Differences in Employment between Household and Establishment Data," Journal of Labor Economics, University of Chicago Press, vol. 31(S1), pages 129-172.
    11. William J. Carrington & Bruce Fallick, 2014. "Why Do Earnings Fall with Job Displacement?," Working Papers (Old Series) 1405, Federal Reserve Bank of Cleveland.
    12. Dean Hyslop & Wilbur Townsend, 2017. "The longer term impacts of job displacement on labour market outcomes," Working Papers 17_12, Motu Economic and Public Policy Research.
    13. Kevin F. Hallock, 2009. "Job Loss and the Fraying of the Implicit Employment Contract," Journal of Economic Perspectives, American Economic Association, vol. 23(4), pages 69-93, Fall.
    14. Illing, Hannah & Koch, Theresa, 2021. "Who Suffers the Greatest Loss? Costs of Job Displacement for Migrants and Natives," IAB-Discussion Paper 202108, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    15. Johannes F. Schmieder & Till von Wachter, 2010. "Does Wage Persistence Matter for Employment Fluctuations? Evidence from Displaced Workers," American Economic Journal: Applied Economics, American Economic Association, vol. 2(3), pages 1-21, July.
    16. Richard Upward & Peter W. Wright, 2019. "Don't Look Down: The Consequences of Job Loss in a Flexible Labour Market," Economica, London School of Economics and Political Science, vol. 86(341), pages 166-200, January.
    17. Henry S. Farber, 2016. "Employment, Hours and Earnings Consequences of Job Loss: U.S. Evidence from the Displaced Workers Survey," Working Papers 589a, Princeton University, Department of Economics, Industrial Relations Section..
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