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Wage and Earnings Losses of Displaced Workers in Finland

  • Jukka Appelqvist
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    Abstract: The purpose of this study is to investigate the cost of job displacement for private sector workers displaced in Finland during the years 1992 and 1997. Our main goal is to measure the ways in which involuntary job loss affects the subsequent labor income of displaced workers when compared to similar workers who were not displaced. Our main finding is that displaced workers suffer substantial and persistent losses in both monthly wages and annual earnings. The severity of these losses is related to the time during which the displacement happened: the workers who were displaced in 1992 (during the recession) suffered considerably larger losses than the workers who were displaced in 1997. The final section of the study discusses possible explanations for the estimated losses.

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    Paper provided by Government Institute for Economic Research Finland (VATT) in its series Discussion Papers with number 422.

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    Date of creation: 25 May 2007
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    Handle: RePEc:fer:dpaper:422
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    1. Tomi Kyyrä & Ralf Wilke, 2004. "Reduction in the Long-Term Unemployment of the Elderly: A Success Story from Finland," Discussion Papers 346, Government Institute for Economic Research Finland (VATT).
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    3. Bruce C. Fallick, 1996. "A review of the recent empirical literature on displaced workers," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 50(1), pages 5-16, October.
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    6. Hartmut Lehmann & Norberto Pignatti & Jonathan Wadsworth, 2005. "The Incidence and Cost of Job Loss in the Ukrainian Labor Market," Upjohn Working Papers and Journal Articles 05-122, W.E. Upjohn Institute for Employment Research.
    7. Anabela Carneiro & Pedro Portugal, 2006. "Earnings Losses of Displaced Workers: Evidence from a Matched Employer-employee Data Set," CEF.UP Working Papers 0607, Universidade do Porto, Faculdade de Economia do Porto.
    8. Frederiksen, Anders & Ibsen, Rikke & Rosholm, Michael & Westergaard-Nielsen, Niels, 2013. "Labour market signalling and unemployment duration: An empirical analysis using employer–employee data," Economics Letters, Elsevier, vol. 118(1), pages 84-86.
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    10. Burda, Michael C. & Mertens, Antje, 2001. "Estimating wage losses of displaced workers in Germany," Labour Economics, Elsevier, vol. 8(1), pages 15-41, January.
    11. Robert F. Schoeni & Michael Dardia, 1997. "Earnings Losses of Displaced Workers in the 1990s," JCPR Working Papers 8, Northwestern University/University of Chicago Joint Center for Poverty Research.
    12. David Margolis, 1999. "Part-Year Employment, Slow Reemployment and Earnings Losses : The Case of Worker Displacement in France," Working Papers 99-04, Centre de Recherche en Economie et Statistique.
    13. Ruhm, Christopher J, 1991. "Are Workers Permanently Scarred by Job Displacements?," American Economic Review, American Economic Association, vol. 81(1), pages 319-24, March.
    14. Lori G. Kletzer, 1998. "Job Displacement," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 115-136, Winter.
    15. Peter J. Kuhn (ed.), 2002. "Losing Work, Moving On: International Perspectives on Worker Displacement," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number lwmo, March.
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    17. Lazear, Edward P, 1981. "Agency, Earnings Profiles, Productivity, and Hours Restrictions," American Economic Review, American Economic Association, vol. 71(4), pages 606-20, September.
    18. Kaplan, David & Martinez, Gabriel & Robertson, Raymond, 2005. "What Happens to Wages After Displacement?," MPRA Paper 3079, University Library of Munich, Germany.
    19. Kenneth A. Couch, 2001. "Earnings losses and unemployment of displaced workers in Germany," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 54(3), pages 559-572, April.
    20. Lawrence F. Katz & Bruce D. Meyer, 1988. "Unemployment Insurance, Recall Expectations, And Unemployment Outcomes," NBER Working Papers 2594, National Bureau of Economic Research, Inc.
    21. Orazem, Peter & Vodopivec, Milan & Wu, Ruth, 1995. "Worker displacement during the transition : experience from Slovenia," Policy Research Working Paper Series 1449, The World Bank.
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    23. Jovanovic, Boyan, 1979. "Job Matching and the Theory of Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 972-90, October.
    24. Lucrezia Reichlin, 1999. "The economic crisis of the 1990's in Finland: discussion," ULB Institutional Repository 2013/10201, ULB -- Universite Libre de Bruxelles.
    25. repec:fth:inseep:9904 is not listed on IDEAS
    26. Richard Blundell & Monica Costa Dias, 2000. "Evaluation methods for non-experimental data," Fiscal Studies, Institute for Fiscal Studies, vol. 21(4), pages 427-468, January.
    27. Denise J. Doiron, 1995. "Lay-Offs as Signals: The Canadian Evidence," Canadian Journal of Economics, Canadian Economics Association, vol. 28(4a), pages 899-913, November.
    28. Marcus Eliason & Donald Storrie, 2006. "Lasting or Latent Scars? Swedish Evidence on the Long-Term Effects of Job Displacement," Journal of Labor Economics, University of Chicago Press, vol. 24(4), pages 831-856, October.
    29. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
    30. Daniel S. Hamermesh, 1987. "What Do We Know About Worker Displacement in the U.S.?," NBER Working Papers 2402, National Bureau of Economic Research, Inc.
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