IDEAS home Printed from
   My bibliography  Save this paper

Labour Market Matters - December 2012


  • Tran, Vivian


It is well-documented that workers displaced from long-tenure jobs tend to have difficulty finding new employment, and face even greater difficulty finding a job without suffering a substantial loss in earnings. Workers with significant prior tenure typically undergo substantial earnings losses, with mean losses of 25-35 percent for those with at least five years’ tenure. Such earnings losses have been found to be persistent even five years after the displacement. Earnings losses suffered by displaced long-tenure workers tend to be large and may be permanent. Policies to address problems faced by displaced long-tenure workers tend to be centred on education, training and skill development. A report by CLSRN affiliate Stephen Jones (McMaster University) entitled “The Effectiveness of Training for Displaced Workers with Long Prior Job Tenure†(CLSRN Working Paper no. 92)* cautions that research shows returns to training for displaced workers that are low, being significantly less than the returns to formal schooling which lie in the 6-9% range. On a cost-benefit basis, the body of evidence does not show that training pays off for most of the displaced population. How does a firm’s decision to engage in employee training react to economic fluctuations? During downturns, lower productivity (a “negative productivity shock†) can be associated with increased training, as the opportunity cost to train workers is lower. However, increased productivity (a “positive productivity shock†) can be related to the adoption of new technologies that may require training, which can create increased return to skill. Currently, there is little evidence to prove which of the two scenarios holds more accurately over the other. In a paper entitled “The Impact of Aggregate and Sectoral Fluctuations on Training Decisions†(CLSRN Working Paper no. 45) CLSRN affiliates Vincenzo Caponi (Ryerson University), Cevat Burc Kayahan (Acadia University), and Miana Plesca (University of Guelph) examine how the firm-level decision to train depends on aggregate and sectoral output fluctuations, and find that more training tends to happen during downturns, and that training is generally higher in sectors that are doing relatively better than others.

Suggested Citation

  • Tran, Vivian, 2012. "Labour Market Matters - December 2012," CLSSRN working papers clsrn_admin-2012-37, Vancouver School of Economics, revised 27 Dec 2012.
  • Handle: RePEc:ubc:clssrn:clsrn_admin-2012-37

    Download full text from publisher

    File URL:
    Download Restriction: no

    More about this item


    Training; Compensation; Economic Fluctuations; Public Policy;

    JEL classification:

    • P36 - Economic Systems - - Socialist Institutions and Their Transitions - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ubc:clssrn:clsrn_admin-2012-37. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Vivian Tran). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.