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Displaced workers, early leavers, and re-employment wages

  • Audra Bowlus

    (University of Western Ontario)

  • Lars Vilhuber

    ()

    (Department of Economics, York University)

When receiving information about an imminent plant closure or mass layoffs, workers search for new jobs. This has been the premise of advance notice legislation, but has been difficult to verify using survey data. In this paper, we lay out a search model that takes explicitly into account the information flow prior to a mass layoff. Using universal wage data files that allow us to identify individuals working with healthy and displacing firms both at the time of displacement as well as any other time period, we test the predictions of the model on re-employment wages. Controlling for worker quality and unobservable firm characteristics, workers leaving a "distressed" firm have higher re-employment wages than workers who stay with the distressed firm until displacement.

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Paper provided by International Conferences on Panel Data in its series 10th International Conference on Panel Data, Berlin, July 5-6, 2002 with number C1-1.

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Date of creation: Mar 2002
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Handle: RePEc:cpd:pd2002:c1-1
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  1. Louis S. Jacobson & Robert J. LaLonde & Daniel Sullivan, 1992. "Earnings Losses of Displaced Workers," Upjohn Working Papers and Journal Articles 92-11, W.E. Upjohn Institute for Employment Research.
  2. Dale Mortensen, 1984. "Job Search and Labor Market Analysis," Discussion Papers 594, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  3. Lori G. Kletzer, 1998. "Job Displacement," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 115-136, Winter.
  4. Burdett, Kenneth & Mortensen, Dale T, 1980. "Search, Layoffs, and Labor Market Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 88(4), pages 652-72, August.
  5. Harry Krashinsky, 2002. "Evidence on adverse selection and establishment size in the labor market," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 56(1), pages 84-96, October.
  6. Paul A. Lengermann & Lars Vilhuber, 2002. "Abandoning the Sinking Ship: The Composition of Worker Flows Prior to Displacement," Longitudinal Employer-Household Dynamics Technical Papers 2002-11, Center for Economic Studies, U.S. Census Bureau.
  7. Jones, Stephen R G & Kuhn, Peter, 1995. "Mandatory Notice and Unemployment," Journal of Labor Economics, University of Chicago Press, vol. 13(4), pages 599-622, October.
  8. Henry S. Farber, 1999. "Alternative and Part-Time Employment Arrangements as a Response to Job Loss," NBER Working Papers 7002, National Bureau of Economic Research, Inc.
  9. Fallick, Bruce Chelimsky, 1994. "The Endogeneity of Advance Notice and Fear of Destructive Attrition," The Review of Economics and Statistics, MIT Press, vol. 76(2), pages 378-84, May.
  10. Farber, Henry S, 1999. "Alternative and Part-Time Employment Arrangements as a Response to Job Loss," Journal of Labor Economics, University of Chicago Press, vol. 17(4), pages S142-69, October.
  11. Paul Swaim & Michael Podgursky, 1990. "Advance Notice and Job Search: The Value of an Early Start," Journal of Human Resources, University of Wisconsin Press, vol. 25(2), pages 147-178.
  12. John M. Abowd & Lars Vilhuber, 2002. "The Sensitivity of Economic Statistics to Coding Errors in Personal Identifiers," Longitudinal Employer-Household Dynamics Technical Papers 2002-17, Center for Economic Studies, U.S. Census Bureau, revised Mar 2003.
  13. Bruce C. Fallick, 1995. "A review of the recent empirical literature on displaced workers," Finance and Economics Discussion Series 95-14, Board of Governors of the Federal Reserve System (U.S.).
  14. John T. Addison & Pedro Portugal, 1987. "The effect of advance notification of plant closings on unemployment," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 41(1), pages 3-16, October.
  15. Abowd, John M. & Kramarz, Francis, 1999. "Econometric analyses of linked employer-employee data," Labour Economics, Elsevier, vol. 6(1), pages 53-74, March.
  16. Ruhm, Christopher J, 1994. "Advance Notice, Job Search, and Postdisplacement Earnings," Journal of Labor Economics, University of Chicago Press, vol. 12(1), pages 1-28, January.
  17. John M. Abowd & Robert H. Creecy & Francis Kramarz, 2002. "Computing Person and Firm Effects Using Linked Longitudinal Employer-Employee Data," Longitudinal Employer-Household Dynamics Technical Papers 2002-06, Center for Economic Studies, U.S. Census Bureau.
  18. Pagan, Adrian, 1984. "Econometric Issues in the Analysis of Regressions with Generated Regressors," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 25(1), pages 221-47, February.
  19. Ruhm, Christopher J, 1992. "Advance Notice and Postdisplacement Joblessness," Journal of Labor Economics, University of Chicago Press, vol. 10(1), pages 1-32, January.
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