The Costs of Involuntary Job Loss: Impacts on Workers’ Employment and Earnings
This paper examines the incidence of involuntary job loss and its impact on the employment and earnings of affected workers, using data from the Survey of Families, Incomes and Employment (SoFIE) for the 2002–09 period. It focusses on employees who had been working in their job for at least one year before the job loss. The impact of displacement on employment and earnings was estimated by using a propensity score-matching approach to select similar non-displaced workers and then compare their outcomes. We find that the employment rate of displaced workers was on average 27 percentage points lower 0–1 years after displacement, 14 percentage points lower 1–2 years after, and 8 percentage points lower 2–3 years after, than that of the matched comparison group. The average wage of re-employed displaced workers was 12 percent lower 0–1 years after displacement, 11 percent lower 1–2 years after and 7 percent lower 2–3 years after. Other impacts included increases in unemployment and self-employment, reductions in average weekly hours, and reductions in weekly and annual earnings.
|Date of creation:||Apr 2013|
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- Till von Wachter & Jae Song & Joyce Manchester, 2008. "Long-Term Earnings Losses due to Job Separation During the 1982 Recession: An Analysis Using Longitudinal Administrative Data from 1974 to 2004," Discussion Papers 0708-16, Columbia University, Department of Economics.
- 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.
- Richard Fabling & David C. Maré, 2012. "Cyclical Labour Market Adjustment in New Zealand: The Response of Firms to the Global Financial Crisis and its Implications for Workers," Working Papers 12_04, Motu Economic and Public Policy Research.
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