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Wage Losses of Displaced Workers in France and the US?

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  • Arnaud Lefranc

    (Universite Paris 10)

Abstract

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.

Suggested Citation

  • Arnaud Lefranc, 2000. "Wage Losses of Displaced Workers in France and the US?," Econometric Society World Congress 2000 Contributed Papers 1566, Econometric Society.
  • Handle: RePEc:ecm:wc2000:1566
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    References listed on IDEAS

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    1. Gibbons, Robert & Katz, Lawrence F, 1991. "Layoffs and Lemons," Journal of Labor Economics, University of Chicago Press, vol. 9(4), pages 351-380, October.
    2. Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, vol. 56(2), pages 259-293, March.
    3. 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.
    4. 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.
    5. 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.
    6. 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.
    7. 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.
    8. Topel, Robert H, 1991. "Specific Capital, Mobility, and Wages: Wages Rise with Job Seniority," Journal of Political Economy, University of Chicago Press, vol. 99(1), pages 145-176, February.
    9. Joseph G. Altonji & Robert A. Shakotko, 1987. "Do Wages Rise with Job Seniority?," Review of Economic Studies, Oxford University Press, vol. 54(3), pages 437-459.
    10. 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.
    11. Abraham, Katharine G & Farber, Henry S, 1987. "Job Duration, Seniority, and Earnings," American Economic Review, American Economic Association, vol. 77(3), pages 278-297, June.
    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.
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    Cited by:

    1. Davia, Maria A., 2005. "Job mobility and wage mobility at the beginning of the working career: a comparative view across Europe," ISER Working Paper Series 2005-03, Institute for Social and Economic Research.
    2. Garcia Perez, Jose Ignacio & Rebollo Sanz, Yolanda, 2005. "Wage changes through job mobility in Europe: A multinomial endogenous switching approach," Labour Economics, Elsevier, vol. 12(4), pages 531-555, August.

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