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

  • Anabela Carneiro
  • Pedro Portugal

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.

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Paper provided by Banco de Portugal, Economics and Research Department in its series Working Papers with number w200614.

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Date of creation: 2006
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Handle: RePEc:ptu:wpaper:w200614
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  1. John T. Addison & Pedro Portugal, 2003. "Unemployment Duration Competing and Defective Risks," Journal of Human Resources, University of Wisconsin Press, vol. 38(1).
  2. Robert H. Topel, 1990. "Specific Capital, Mobility, and Wages: Wages Rise with Job Seniority," NBER Working Papers 3294, National Bureau of Economic Research, Inc.
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  8. Nickell, S. & Wadhwani, S., 1989. "Insider Forces And Wage Determination," Papers 334, London School of Economics - Centre for Labour Economics.
  9. Joseph Altonji & R. Shakotko, 1985. "Do Wages Rise with Job Seniority?," Working Papers 567, Princeton University, Department of Economics, Industrial Relations Section..
  10. Blanchard, O.J. & Diamond, P., 1990. "Ranking, Unemployment Duration, And Wages," Working papers 546, Massachusetts Institute of Technology (MIT), Department of Economics.
  11. Katharine G. Abraham & Henry S. Farber, 1986. "Job Duration, Seniority, and Earnings," NBER Working Papers 1819, National Bureau of Economic Research, Inc.
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  13. Pissarides, Christopher A, 1992. "Loss of Skill during Unemployment and the Persistence of Employment Shocks," The Quarterly Journal of Economics, MIT Press, vol. 107(4), pages 1371-91, November.
  14. Margolis, D.N., 2000. "Worker Displacement in France," Papiers d'Economie Mathématique et Applications 2000.03, Université Panthéon-Sorbonne (Paris 1).
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  20. repec:wdi:papers:2003-614 is not listed on IDEAS
  21. Katharine G. Abraham & Henry S. Farber, 1988. "Returns to seniority in union and nonunion jobs: A new look at the evidence," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 42(1), pages 3-19, October.
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  25. Michael Podgursky & Paul Swaim, 1987. "Job displacement and earnings loss: Evidence from the Displaced Worker Survey," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 41(1), pages 17-29, October.
  26. 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.
  27. Douglas L. Kruse, 1988. "International trade and the labor market experience of displaced workers," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 41(3), pages 402-417, April.
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