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What Do We Know About Worker Displacement in the U.S.?


  • Daniel S. Hamermesh


In the United States roughly one-half million workers with 3+ years on the job have become unemployed each year during the 1980s because of plant closings. There is evidence that this represents an increase over earlier periods of similar macroeconomic conditions. Wage cuts within the observed range lower only slightly the probability that a plant will close. The average loss of earnings, due to long spells of post-displacement unemployment and to subsequent reduced wages, is substantial. While minorities suffer an above-average rate of displacement, the earnings losses they experience upon displacement are not disproportionately high. Women and older workers are no more likely than others to become displaced, and their losses are not disproportionate; but workers who have been on the job longer lose more.

Suggested Citation

  • 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.
  • Handle: RePEc:nbr:nberwo:2402
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    1. Madden, Janice Fanning, 1987. "Gender Differences in the Cost of Displacement: An Empirical Test of Discrimination in the Labor Market," American Economic Review, American Economic Association, vol. 77(2), pages 246-251, May.
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    Cited by:

    1. Chong, Alberto & Lopez-de-Silanes, Florencio, 2002. "Privatization and labor force restructuring around the world," Policy Research Working Paper Series 2884, The World Bank.
    2. Carl Davidson & Stephen A. Woodbury, 2000. "Wage-Rate Subsidies for Dislocated Workers," Book chapters authored by Upjohn Institute researchers,in: Laurie J. Bassi & Stephen A. Woodbury (ed.), Long-term Unemployment and Reemployment Policies, pages 141-184 W.E. Upjohn Institute for Employment Research.
    3. Rama,Martin G., 1997. "Efficient public sector downsizing," Policy Research Working Paper Series 1840, The World Bank.
    4. Marius Brülhart & Robert Elliott, 2002. "Labour-market effects of intra-industry trade: Evidence for the United Kingdom," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 138(2), pages 207-228, June.
    5. Bergemann, Annette & Mertens, Antje, 2004. "Job Stability Trends, Layoffs and Transitions to Unemployment - An Empirical Analysis for West Germany," CEPR Discussion Papers 4792, C.E.P.R. Discussion Papers.
    6. Oliver Ruf, 2008. "Effects of Firm Size and Business Cycle on Earning Losses of Displaced Workers," IEW - Working Papers 366, Institute for Empirical Research in Economics - University of Zurich.
    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. Huttunen, Kristiina & Moen, Jarle & Salvanes, Kjell G., 2006. "How Destructive Is Creative Destruction? The Costs of Worker Displacement," IZA Discussion Papers 2316, Institute for the Study of Labor (IZA).
    9. John Haltiwanger & Steven J. Davis, 1999. "On the Driving Forces behind Cyclical Movements in Employment and Job Reallocation," American Economic Review, American Economic Association, vol. 89(5), pages 1234-1258, December.
    10. 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.
    11. Federico Sturzenegger & Ernesto Schargrodsky & Sebastian Galiani & Paul Gertler, 2003. "The Costs and Benefits of Privatization in Argentina: A Microeconomic Analysis," Research Department Publications 3148, Inter-American Development Bank, Research Department.
    12. John Hassler & José V. Rodríguez Mora & Kjetil Storesletten & Fabrizio Zilibotti, 1998. "Equilibrium unemployment insurance," Economics Working Papers 605, Department of Economics and Business, Universitat Pompeu Fabra, revised Jun 1999.
    13. Michael W. Klein & Scott Schuh & Robert K. Triest, 2002. "Job creation, job destruction, and international competition: a literature review," Working Papers 02-7, Federal Reserve Bank of Boston.
    14. Ann Huff Stevens, 1995. "Long-Term Effects of Job Displacement: Evidence from the Panel Study of Income Dynamics," NBER Working Papers 5343, National Bureau of Economic Research, Inc.
    15. Bognanno, Michael & Kambayashi, Ryo, 2013. "Trends in worker displacement penalties in Japan: 1991–2005," Japan and the World Economy, Elsevier, vol. 27(C), pages 41-57.
    16. Sebastián Galiani and Federico Sturzenegger, "undated". "The Impact of Privatization on the Earnings of Restructured Workers," Business School Working Papers longterm, Universidad Torcuato Di Tella.
    17. Wiklund, Fredrik, 1999. "Unemployment and Subsequent Wages: Does Gender Matter?," Working Paper Series 1999:5, Uppsala University, Department of Economics.
    18. Kevin Hollenbeck & Richard J. Willke, 1990. "Dislocated Worker Human Capital Depreciation and Recovery," Upjohn Working Papers and Journal Articles 90-04, W.E. Upjohn Institute for Employment Research.
    19. Sebastian Galiani & Federico Sturzenegger, 2008. "The Impact of Privatization on the Earnings of Restructured Workers: Evidence From the Oil Industry," Journal of Labor Research, Springer, vol. 29(2), pages 162-176, June.
    20. 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.
    21. Appelqvist, Jukka, 2007. "Wage and Earnings Losses of Displaced Workers in Finland," Discussion Papers 422, VATT Institute for Economic Research.
    22. Borland, J. & McDonald, J.T., 2000. "Displaced workers in Australia 1984-1996: Macroeconomic Conditions and Structural Change," Papers 2000-10, Tasmania - Department of Economics.
    23. Alberto Chong & Florencio Lopez-de-Silanes, 2003. "La privatización y la reestructuración de la fuerza laboral en todo el mundo," Research Department Publications 4330, Inter-American Development Bank, Research Department.
    24. Ljungqvist, Lars & Sargent, Thomas J, 2002. "The European Employment Experience," CEPR Discussion Papers 3543, C.E.P.R. Discussion Papers.
    25. Bognanno, Michael L. & Delgado, Lisa, 2005. "Job Displacement Penalties in Japan," IZA Discussion Papers 1650, Institute for the Study of Labor (IZA).

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