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What Happens to Wages After Displacement?

Author Info

Listed author(s):
  • Kaplan, David
  • Martinez, Gabriel
  • Robertson, Raymond

Abstract

Faced with limited resources, policymakers need to know when and where to target support for displaced workers. The academic literature offers little support, presenting wide-ranging results with no consistent explanation for the observed differences in wages after workers are displaced. In this paper, we demonstrate that the heterogeneity found in the literature is consistent with varying market conditions. The results suggest that support for displaced workers can be more efficiently allocated by considering the timing and location of displacement.

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File URL: https://mpra.ub.uni-muenchen.de/3079/1/MPRA_paper_3079.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 3079.

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Date of creation: 2005
Publication status: Published in Journal of the Latin American and Caribbean Economic Association 2.5(2005): pp. 197-234
Handle: RePEc:pra:mprapa:3079
Contact details of provider: Postal:
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Phone: +49-(0)89-2180-2459
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Web page: https://mpra.ub.uni-muenchen.de

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Keywords: Displaced Workers; Mexico;

Other versions of this item:

Find related papers by JEL classification:
  • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
  • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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  1. Stefan Bender & Christian Dustmann & David Margolis & Costas Meghir, 1998. "Worker Displacement in France and Germany," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00370611, HAL.
  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. Carmen Pagés-Serra & James J. Heckman, 2000. "The Cost of Job Security Regulation: Evidence from Latin American Labor Markets," Research Department Publications 4227, Inter-American Development Bank, Research Department.
  4. Kenneth A. Couch, 2001. "Earnings Losses and Unemployment of Displaced Workers in Germany," ILR Review, Cornell University, ILR School, vol. 54(3), pages 559-572, April.
  5. Gustavo Gonzaga, 2003. "Labor Turnover and Labor Legislation in Brazil," ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, vol. 0(Fall 2003), pages 165-222, August.
  6. Marie Howland & George E. Peterson, 1988. "Labor Market Conditions and the Reemployment of Displaced Workers," ILR Review, Cornell University, ILR School, vol. 42(1), pages 109-122, October.
  7. Robertson, Raymond & Dutkowsky, Donald H., 2002. "Labor adjustment costs in a destination country: the case of Mexico," Journal of Development Economics, Elsevier, vol. 67(1), pages 29-54, February.
  8. Bruce C. Fallick, 1996. "A Review of the Recent Empirical Literature on Displaced Workers," ILR Review, Cornell University, ILR School, vol. 50(1), pages 5-16, October.
  9. LE Marcal, 2001. "Does Trade Adjustment Assistance Help Trade-Displaced Workers?," Contemporary Economic Policy, Western Economic Association International, vol. 19(1), pages 59-72, 01.
  10. 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.
  11. Hamermesh, Daniel S, 1989. "Labor Demand and the Structure of Adjustment Costs," American Economic Review, American Economic Association, vol. 79(4), pages 674-689, September.
  12. Hanson, Gordon H, 1998. "North American Economic Integration and Industry Location," Oxford Review of Economic Policy, Oxford University Press, vol. 14(2), pages 30-44, Summer.
  13. Hashimoto, Masanori, 1979. "Bonus Payments, on-the-Job Training, and Lifetime Employment in Japan," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 1086-1104, October.
  14. Raymond Robertson, 2000. "Wage Shocks and North American Labor-Market Integration," American Economic Review, American Economic Association, vol. 90(4), pages 742-764, September.
  15. Burda, Michael C. & Mertens, Antje, 2001. "Estimating wage losses of displaced workers in Germany," Labour Economics, Elsevier, vol. 8(1), pages 15-41, January.
  16. Feenstra, Robert C. & Hanson, Gordon H., 1997. "Foreign direct investment and relative wages: Evidence from Mexico's maquiladoras," Journal of International Economics, Elsevier, vol. 42(3-4), pages 371-393, May.
  17. 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.
  18. Pfann, Gerard A & Ben Kriechel, 2003. "Heterogeneity among Displaced Workers," Royal Economic Society Annual Conference 2003 164, Royal Economic Society.
  19. Sara de la Rica, 1995. "Evidence of Preseparation Earnings Losses in the Displaced Worker Survey," Journal of Human Resources, University of Wisconsin Press, vol. 30(3), pages 610-621.
  20. McLaughlin, Kenneth J, 1991. "A Theory of Quits and Layoffs with Efficient Turnover," Journal of Political Economy, University of Chicago Press, vol. 99(1), pages 1-29, February.
  21. Carmen Pagés-Serra, 2000. "The Cost of Job Security Regulation: Evidence from Latin American Labor Markets," ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, vol. 0(Fall 2000), pages 109-154, August.
  22. Panagides, Alexis & Patrinos, Harry Anthony & DEC, 1994. "Union - nonunion wage differentials in the developing world : a case study of Mexico," Policy Research Working Paper Series 1269, The World Bank.
  23. Ruhm, Christopher J, 1991. "Are Workers Permanently Scarred by Job Displacements?," American Economic Review, American Economic Association, vol. 81(1), pages 319-324, March.
  24. Lori G. Kletzer, 1998. "Job Displacement," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 115-136, Winter.
  25. Steven J. Davis & John Haltiwanger, 1992. "Gross Job Creation, Gross Job Destruction, and Employment Reallocation," The Quarterly Journal of Economics, Oxford University Press, vol. 107(3), pages 819-863.
  26. Stevens, Margaret, 1994. "A Theoretical Model of On-the-Job Training with Imperfect Competition," Oxford Economic Papers, Oxford University Press, vol. 46(4), pages 537-562, October.
  27. Revenga, Ana & Riboud, Michelle & Tan, Hong, 1994. "The Impact of Mexico's Retraining Program on Employment and Wages," World Bank Economic Review, World Bank Group, vol. 8(2), pages 247-277, May.
  28. Naercio Menezes-Filho, 2004. "The Costs of Displacement in Brazil," Econometric Society 2004 Latin American Meetings 200, Econometric Society.
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Cited by:

  1. Naércio Aquino Menezes-Filho & Marc-Andreas Muendler & Garey Ramey, 2008. "The Structure of Worker Compensation in Brazil, with a Comparison to France and the United States," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 324-346, May.
  2. Verónica Amarante & Rodrigo Arim & Andrés Dean, 2014. "The Effects of Being Out of the Labor Market on Subsequent Wages: Evidence for Uruguay," Journal of Labor Research, Springer, vol. 35(1), pages 39-62, March.
  3. Nicolas Melissas, 2007. "The Trader, the Market Maker, his Guru and her Information," Working Papers 0702, Centro de Investigacion Economica, ITAM.
  4. Kaplan, David S. & Piedra, Eduardo & Seira, Enrique, 2011. "Entry regulation and business start-ups: Evidence from Mexico," Journal of Public Economics, Elsevier, vol. 95(11), pages 1501-1515.
  5. Kaplan, David S. & Gonzalez, Gabriel Martinez & Robertson, Raymond, 2007. "Mexican employment dynamics : evidence from matched firm-worker data," Policy Research Working Paper Series 4433, The World Bank.
  6. Verónica Alaimo & Mariano Bosch & David S. Kaplan & Carmen Pagés & Laura Ripani, 2015. "Jobs for Growth," IDB Publications (Books), Inter-American Development Bank, number 90977, February.
  7. Couch, Kenneth A. & Jolly, Nicholas A. & Placzek, Dana W., 2011. "Earnings losses of displaced workers and the business cycle: An analysis with administrative data," Economics Letters, Elsevier, vol. 111(1), pages 16-19, April.
  8. Jukka Appelqvist, 2007. "Wage and Earnings Losses of Displaced Workers in Finland," Discussion Papers 422, Government Institute for Economic Research Finland (VATT).
  9. Bendewald, Ellen & Maryns, Nicholas & Robertson, Raymond, 2016. "An Evaluation of the Workforce Investment Act Adult Program in Minnesota: Lessons from the Financial Crisis," IZA Discussion Papers 10107, Institute for the Study of Labor (IZA).
  10. Filhoz, Naercio Aquino Menezes & Muendler, Marc-Andreas & Ramey, Garey, 2005. "The Structure of Worker Compensation in Brazil, With a Comparison to France and the United States¤," University of California at San Diego, Economics Working Paper Series qt55q3h7nj, Department of Economics, UC San Diego.
  11. David Kaplan & Eduardo Piedra & Enrique Seira, 2006. "Are Burdensome Registration Procedures an Important Barrier on Firm Creation? Evidence from Mexico," Discussion Papers 06-013, Stanford Institute for Economic Policy Research.

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