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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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    1. Gibbons, Robert & Katz, Lawrence F, 1991. "Layoffs and Lemons," Journal of Labor Economics, University of Chicago Press, vol. 9(4), pages 351-380, October.
    2. 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.
    3. 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.
    4. 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.
    5. Kletzer, Lori Gladstein, 1989. "Returns to Seniority after Permanent Job Loss," American Economic Review, American Economic Association, vol. 79(3), pages 536-543, June.
    6. Blanchflower, David G, 1991. "Fear, Unemployment and Pay Flexibility," Economic Journal, Royal Economic Society, vol. 101(406), pages 483-496, May.
    7. Joseph Altonji & R. Shakotko, 1985. "Do Wages Rise with Job Seniority?," Working Papers 567, Princeton University, Department of Economics, Industrial Relations Section..
    8. Ruhm, Christopher J, 1991. "Are Workers Permanently Scarred by Job Displacements?," American Economic Review, American Economic Association, vol. 81(1), pages 319-324, March.
    9. Joseph G. Altonji & Robert A. Shakotko, 1985. "Do Wages Rise With Job Seniority?," NBER Working Papers 1616, National Bureau of Economic Research, Inc.
    10. repec:fth:prinin:187 is not listed on IDEAS
    11. Joseph G. Altonji & Robert A. Shakotko, 1985. "Do Wages Rise with Job Seniority?," Working Papers 567, Princeton University, Department of Economics, Industrial Relations Section..
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    Citations

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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. Finnie, Ross, 2006. "Mobilite internationale : donnees sur les taux de sortie et de retour des Canadiens, 1982 a 2003," Direction des etudes analytiques : documents de recherche 2006288f, Statistics Canada, Direction des etudes analytiques.
    3. 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.
    4. David S. Kaplan & Raymond Robertson & Gabriel Martínez González, 2005. "What Happens to Wages after Displacement?," ECONOMIA JOURNAL, THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION - LACEA, vol. 0(Spring 20), pages 197-242, January.
    5. 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.
    6. 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.
    7. 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.
    8. 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.
    9. S. Filiz, 2016. "Mothers’ Involuntary Job Loss and Children’s Academic Achievement," Journal of Labor Research, Springer, vol. 37(1), pages 98-127, March.

    More about this item

    JEL classification:

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

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