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Long-Term Effects of Job Displacement: Evidence from the Panel Study of Income Dynamics

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  • Ann Huff Stevens

Abstract

This paper measures the long-term wage and earnings losses of workers who lose jobs due to plant closings and layoffs, using a fixed-effects estimator to control for unobserved worker characteristics and longitudinal data from the Panel Study of Income Dynamics. The results show large and persistent effects of displacement on average, with earnings and wages falling by 25 and 12 percent in the year after job loss. Six or more years later, earnings and wages remain reduced by approximately nine percent. Multiple job losses are responsible for much of this persistence. Those workers who avoid subsequent displacements experience more rapid recovery, with earnings and wage reductions of one and four percent six or more years after displacement. These multiple job losses are not heavily concentrated among any identifiable group of workers, but instead affect the recovery patterns of workers with a variety of characteristics.

Suggested Citation

  • 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.
    • Handle: RePEc:nbr:nberwo:5343
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    References listed on IDEAS

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    10. repec:fth:prinin:187 is not listed on IDEAS
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    Cited by:

    1. Finnie, Ross, 2006. "International Mobility: Patterns of Exit and Return of Canadians, 1982 to 2003," Analytical Studies Branch Research Paper Series 2006288e, Statistics Canada, Analytical Studies Branch.
    2. Batchelder Lily L. & Goldberg Fred T., 2008. "Reforming Tax Incentives Into Uniform Refundable Tax Credits," Basic Income Studies, De Gruyter, vol. 2(2), pages 1-11, January.
    3. Paul Attewell, 1999. "The Impact of Family on Job Displacement and Recovery," The ANNALS of the American Academy of Political and Social Science, , vol. 562(1), pages 66-82, March.
    4. Lilia Costabile, 2002. "Aspetti economici del "Libro Bianco del Ministero del Lavoro"," STUDI ECONOMICI, FrancoAngeli Editore, vol. 2002(77).
    5. 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.
    6. S. Elif Filiz, 2016. "Mothers’ Involuntary Job Loss and Children’s Academic Achievement," Journal of Labor Research, Springer, vol. 37(1), pages 98-127, March.
    7. Finnie, Ross, 2006. "Mobilite internationale : donnees sur les taux de sortie et de retour des Canadiens, 1982 a 2003," Direction des études analytiques : documents de recherche 2006288f, Statistics Canada, Direction des études analytiques.
    8. David S. Kaplan & Raymond Robertson & Gabriel Martínez González, 2005. "What Happens to Wages after Displacement?," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Spring 20), pages 197-242, January.
    9. Morse, Lawrence B., 2005. "After a shutdown: a case study of a closed textile mill," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 34(3), pages 401-415, May.
    10. Julie L. Hotchkiss & M. Melinda Pitts & John C. Robertson, 2004. "Wage gains among job changers across the business cycle: insight from state administrative data," FRB Atlanta Working Paper 2004-19, Federal Reserve Bank of Atlanta.

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    JEL classification:

    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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