IDEAS home Printed from
MyIDEAS: Login to save this paper or follow this series

When a Door Closes a Window Opens? Investigating the Effects of Involuntary Separations

  • Simone Balestra


    (Department of Business Administration, University of Zurich)

  • Uschi Backes-Gellner


    (Department of Business Administration, University of Zurich)

Using Swiss Labor Force Survey data from 1996 to 2009, this study estimates the earning losses of workers experiencing an involuntary job separation. We follow two empirical approaches: the method usually applied in the literature (fixed-effects estimation) and a new approach (Poisson pseudo-maximum-likelihood estimation) that allows considering the full set of involuntary separations, including those with zero labor market earnings because of unemployment. Using the rst method, we estimate an immediate loss of about 10 percent, a loss remaining statistically significant up to four years after separation at about 11 percent. Using the second approach, we estimate a loss of 40 percent in the year of separation and a longterm loss of almost 20 percent four years after separation. These larger estimates embed the total productivity loss caused by an involuntary separation. Compared to other reasons for separation, the earning loss pattern is unique for involuntary separations, because no other type of separation implies such permanent scarring.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by University of Zurich, Institute for Strategy and Business Economics (ISU) in its series Economics of Education Working Paper Series with number 0072.

in new window

Length: 36 pages
Date of creation: Feb 2012
Date of revision: Aug 2013
Handle: RePEc:iso:educat:0072
Contact details of provider: Postal: Plattenstrasse 14, CH-8032 Zürich
Phone: ++41 1 634 29 27
Fax: ++41 1 634 43 48
Web page:

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Jacobson, Louis S & LaLonde, Robert J & Sullivan, Daniel G, 1993. "Earnings Losses of Displaced Workers," American Economic Review, American Economic Association, vol. 83(4), pages 685-709, September.
  2. Neal, Derek, 1995. "Industry-Specific Human Capital: Evidence from Displaced Workers," Journal of Labor Economics, University of Chicago Press, vol. 13(4), pages 653-77, October.
  3. Jacob Mincer, 1991. "Education and Unemployment," NBER Working Papers 3838, National Bureau of Economic Research, Inc.
  4. Lori G. Kletzer & Robert W. Fairlie, 2003. "The Long-Term Costs of Job Displacement for Young Adult Workers," ILR Review, Cornell University, ILR School, vol. 56(4), pages 682-698, July.
  5. Zwick, Thomas, 2008. "Earnings Losses After Non-employment Increase With Age," ZEW Discussion Papers 08-041, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  6. 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.
  7. Jacobson, Louis & LaLonde, Robert & G. Sullivan, Daniel, 2005. "Estimating the returns to community college schooling for displaced workers," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 271-304.
  8. Wooldridge, J.M., 1990. "Distribution-Free Estimation Of Some Nonlinear Panel Data Models," Working papers 564, Massachusetts Institute of Technology (MIT), Department of Economics.
  9. Kenneth A. Couch & Dana W. Placzek, 2010. "Earnings Losses of Displaced Workers Revisited," American Economic Review, American Economic Association, vol. 100(1), pages 572-89, March.
  10. Santos Silva, J.M.C & Tenreyro, Silvana, 2005. "The Log of Gravity," CEPR Discussion Papers 5311, C.E.P.R. Discussion Papers.
  11. Gourieroux, Christian & Monfort, Alain & Trognon, Alain, 1984. "Pseudo Maximum Likelihood Methods: Applications to Poisson Models," Econometrica, Econometric Society, vol. 52(3), pages 701-20, May.
  12. Roger White, 2010. "Long-run wage and earnings losses of displaced workers," Applied Economics, Taylor & Francis Journals, vol. 42(14), pages 1845-1856.
  13. 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.
  14. 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.).
  15. Iourii Manovskii & Gueorgui Kambourov, 2004. "Occupational Specificity of Human Capital," 2004 Meeting Papers 197, Society for Economic Dynamics.
  16. Louis Jacobson & Robert J. LaLonde & Daniel Sullivan, 2005. "The impact of community college retraining on older displaced workers: Should we teach old dogs new tricks?," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 58(3), pages 398-415, April.
  17. Ruhm, Christopher J, 1991. "Are Workers Permanently Scarred by Job Displacements?," American Economic Review, American Economic Association, vol. 81(1), pages 319-24, March.
  18. Kettunen, Juha, 1997. "Education and unemployment duration," Economics of Education Review, Elsevier, vol. 16(2), pages 163-170, April.
  19. 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.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:iso:educat:0072. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christian Eggenberger)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.