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Earnings Losses of Displaced Workers: Evidence from a Matched Employer-Employee Data Set

Author

Listed:
  • Pedro Portugal
  • Anabela Carneiro

Abstract

This paper examines the long-term earnings losses of displaced workers in Portugal, using a nationally representative longitudinal linked employer-employee data set. The results show that four years after displacement the earnings of displaced workers remain around 9% (women) to 12% (men) below their counterfactual expected levels. The post-displacement earnings losses are mainly associated with the loss of tenure within the firm and, to a lesser extent, to the loss of sector-specific features. Furthermore, workers who experienced a spell of nonemployment are the most affected by job displacement. Finally, this study points to the importance of controlling for employers' characteristics in this type of wages-dynamic analysis, since there are systematic differences in earnings between displaced and non-displaced workers that stem from differences in firm characteristics. Ignoring them may confound the evaluation of the earnings losses.

Suggested Citation

  • Pedro Portugal & Anabela Carneiro, 2006. "Earnings Losses of Displaced Workers: Evidence from a Matched Employer-Employee Data Set," Working Papers w200614, Banco de Portugal, Economics and Research Department.
    • Handle: RePEc:ptu:wpaper:w200614
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    File URL: https://www.bportugal.pt/sites/default/files/anexos/papers/wp200614.pdf
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    Cited by:

    1. Antoine Bertheau & Edoardo Maria Acabbi & Cristina Barceló & Andreas Gulyas & Stefano Lombardi & Raffaele Saggio, 2023. "The Unequal Consequences of Job Loss across Countries," American Economic Review: Insights, American Economic Association, vol. 5(3), pages 393-408, September.
    2. Lorenzo Caliendo & Luca David Opromolla & Fernando Parro & Alessandro Sforza, 2021. "Goods and Factor Market Integration: A Quantitative Assessment of the EU Enlargement," Journal of Political Economy, University of Chicago Press, vol. 129(12), pages 3491-3545.
    3. Bruce Fallick & John Haltiwanger & Erika McEntarfer, 2012. "Job-to-job flows and the consequences of job separations," Finance and Economics Discussion Series 2012-73, Board of Governors of the Federal Reserve System (U.S.).
    4. Yolanda Kodrzycki, 2007. "Using unexpected recalls to examine the long-term earnings effects of job displacement," Working Papers 07-2, Federal Reserve Bank of Boston.
    5. Antonio Martins-Neto & Xavier Cirera & Alex Coad, 2024. "Routine-biased technological change and employee outcomes after mass layoffs: evidence from Brazil," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 33(3), pages 555-583.
    6. Kyyrä, Tomi & Korkeamäki, Ossi, 2008. "A Distributional Analysis of Displacement Costs in an Economic Depression and Recovery," Discussion Papers 465, VATT Institute for Economic Research.
    7. 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.
    8. Sandra E. Black & Paul J. Devereux & Kjell G. Salvanes, 2015. "Losing Heart? The Effect of Job Displacement on Health," ILR Review, Cornell University, ILR School, vol. 68(4), pages 833-861, August.
    9. Anton Nilsson, 2015. "Who suffers from unemployment? The role of health and skills," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-24, December.
    10. Eliason, Marcus, 2011. "Assistant and auxiliary nurses in crisis times: earnings and employment following public sector job loss in the 1990s," Working Paper Series 2011:1, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    11. Thomas Zwick, 2012. "Earnings Losses after Non-Employment Increase with Age," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 64(1), pages 2-19, January.
    12. Garcia Perez, Jose Ignacio & Rebollo Sanz, Yolanda, 2005. "Wage changes through job mobility in Europe: A multinomial endogenous switching approach," Labour Economics, Elsevier, vol. 12(4), pages 531-555, August.
    13. Giordano Mion & Luca David Opromolla, 2011. "Managers' Mobility, Trade Status and Wages," CEP Discussion Papers dp1044, Centre for Economic Performance, LSE.
    14. Bruce Fallick & John Haltiwanger & Erika McEntarfer & Matthew Staiger, 2019. "Job Displacement and Job Mobility: The Role of Joblessness," Working Papers 19-27R, Federal Reserve Bank of Cleveland, revised 31 Aug 2021.
    15. Sérgio Lagoa & Fátima Suleman, 2016. "Industry- and occupation-specific human capital: evidence from displaced workers," International Journal of Manpower, Emerald Group Publishing Limited, vol. 37(1), pages 44-68, April.
    16. Rosario Aldunate & Gabriela Contreras & Matías Tapia, 2019. "Sectoral Transitions Between Formal Wage Jobs in Chile," Working Papers Central Bank of Chile 836, Central Bank of Chile.
    17. Nóirín McCarthy & Peter W. Wright, 2018. "The Impact of Displacement on the Earnings of Workers in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 49(4), pages 373-417.
    18. Kent Eliasson & Pär Hansson, 2016. "Are workers more vulnerable in tradable industries?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(2), pages 283-320, May.
    19. Ossi Korkeamäki & Jukka Appelqvist & Tomi Kyyrä, 2007. "Quantile Regression Estimates of the Earnings Losses of Displaced Workers," EcoMod2007 23900045, EcoMod.
    20. Appelqvist, Jukka, 2007. "Wage and Earnings Losses of Displaced Workers in Finland," Discussion Papers 422, VATT Institute for Economic Research.
    21. repec:ptu:bdpart:b200610 is not listed on IDEAS

    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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