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Wage Losses of Displaced Workers in France and the US?

  • Arnaud Lefranc

    (Universite Paris 10)

This paper develops a theoretical search framework to analyse the wage losses experienced by displaced workers. We underline the importance of accounting for two different sources of wage losses whose consequences might differ, namely the loss of rents earned on their pre-displacement job and the loss of accumulated firm-specific human capital. We then turn to the measurement and decomposition of wage losses in France and the US using micro data from labor force surveys. We show that while the order of magnitude of wage losses ar comparable in the two economies (10 to 15\%), the sources of wage adjustment differ strongly: all of the wage decline in France seems to be due to the loss of accumulated firm specific earning potential, while in the US\ case, they only account for half of the total wage adjustment.

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Paper provided by Econometric Society in its series Econometric Society World Congress 2000 Contributed Papers with number 1566.

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Date of creation: 01 Aug 2000
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Handle: RePEc:ecm:wc2000:1566
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  1. Mortensen, Dale T., 1987. "Job search and labor market analysis," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 2, chapter 15, pages 849-919 Elsevier.
  2. Gibbons, Robert & Katz, Lawrence F, 1991. "Layoffs and Lemons," Journal of Labor Economics, University of Chicago Press, vol. 9(4), pages 351-80, October.
  3. Abraham, Katharine G & Farber, Henry S, 1987. "Job Duration, Seniority, and Earnings," American Economic Review, American Economic Association, vol. 77(3), pages 278-97, June.
  4. Altonji, Joseph G & Shakotko, Robert A, 1987. "Do Wages Rise with Job Seniority?," Review of Economic Studies, Wiley Blackwell, vol. 54(3), pages 437-59, July.
  5. Leonard, Jonathan & Van Audenrode, Marc, 1995. "The Duration of Unemployment and the Persistence of Wages," CEPR Discussion Papers 1227, C.E.P.R. Discussion Papers.
  6. Robert H. Topel, 1990. "Specific Capital, Mobility, and Wages: Wages Rise with Job Seniority," NBER Working Papers 3294, National Bureau of Economic Research, Inc.
  7. Marie Howland & George E. Peterson, 1988. "Labor market conditions and the reemployment of displaced workers," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 42(1), pages 109-122, October.
  8. Daniel Cohen & Arnaud Lefranc & Gilles Saint-Paul, 1997. "French unemployment: a transatlantic perspective," Economic Policy, CEPR;CES;MSH, vol. 12(25), pages 265-292, October.
  9. Kenneth Burdett & Dale T. Mortensen, 1989. "Equilibrium Wage Differentials and Employer Size," Discussion Papers 860, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  10. Addison, John T & Portugal, Pedro, 1989. "Job Displacement, Relative Wage Changes, and Duration of Unemployment," Journal of Labor Economics, University of Chicago Press, vol. 7(3), pages 281-302, July.
  11. 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.
  12. Arnaud Lefranc, 1997. "Quelques éléments de comparaison des taux de chômage français et américain," Économie et Statistique, Programme National Persée, vol. 301(1), pages 61-72.
  13. Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, vol. 56(2), pages 259-93, March.
  14. Michael Podgursky & Paul Swaim, 1987. "Job displacement and earnings loss: Evidence from the Displaced Worker Survey," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 41(1), pages 17-29, October.
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