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Labor Market Dynamics and Wage Losses of Displaced Workers in France and the United-States

  • Arnaud Lefranc

The objective of this paper is to provide a comparative assessment of the consequences of worker displacement in France and the United States. I estimate wage losses of displaced workers in the two countries and examine the relative contribution of two important sources of post-displacement wage adjustments. The first one relates to the loss of seniority-accumulated firmspecific earnings potential. The second one arises from match heterogeneity. Identification of the relative contribution of these two sources can be achieved given separate estimates of returns to seniority. I show that, while the order of magnitude of total wage losses are comparable in the two economies (10 to 15%), the sources of wage adjustments di_er strongly: all of the wage decline in France seems to be due to the loss of accumulated firm-specific earnings potential, while in the US, more than half of measured wage losses arise from a downgrading of displaced workers into lower quality job matches.

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Paper provided by THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise in its series THEMA Working Papers with number 2002-15.

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Date of creation: 2002
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Handle: RePEc:ema:worpap:2002-15
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