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The Changing Face of Job Loss in the United States, 1981-1995


  • Henry S. Farber

    (Princeton University)


I examine changes in the incidence and consequences of job loss by reported cause between 1981 and 1995 using data from the Displaced Workers Surveys (DWS) from 1984-1996. The overall rate of job loss has increased in the 1990's despite the sustained expansion. The increase in job loss is larger for more educated workers, but less-educated workers continue to have the highest rates of job loss overall. The rate of job loss due to plant closings has been fairly constant over time while the rate of job loss due to "slack work" , an important category primarily for less-educated workers, moves counter-cyclically and has decreased somewhat in recent years. The most substantial changes are increases in the last several years in the rates of job loss for more-educated workers due to position or shift abolished and for all workers due to other (unspecified) reasons. I also examine the consequences of displacement for several post-displacement labor market outcomes. These include a substantially lowered probability of employment and an increased probability of part-time employment. The more educated have higher post-displacement employment rates, are more likely to be employed full-time. Those re-employed, even full-time and regardless of education level, suffer significant earnings losses relative to what they would have earned had they not been displaced. This wage loss has primarily taken the form of a decline in earnings for the less educated, while more educated workers have suffered a smaller earnings decline but have lost the significant earnings growth that accrues to otherwise-equivalent non-displaced workers. Job loss due to position/ shift abolished, a growing category for more educated workers, has particularly severe negative consequences for earnings and may be related to corporate downsizing and restructuring. The source and meaning of the large increase in job loss for other reasons remains a mystery.

Suggested Citation

  • Henry S. Farber, 1997. "The Changing Face of Job Loss in the United States, 1981-1995," Working Papers 761, Princeton University, Department of Economics, Industrial Relations Section..
  • Handle: RePEc:pri:indrel:382

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    displacement; job loss;

    JEL classification:

    • E64 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Incomes Policy; Price Policy


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