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The effects of being out of the labor market on subsequent wages: evidence for Uruguay

  • Verónica Amarante


    (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)

  • Rodrigo Arim


    (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)

  • Andrés Dean


    (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)

Based on administrative data combining workers’ earnings histories and unemployment insurance benefits, we document short and long term wage losses for a large sample of Uruguayan formal workers with high tenure. We are able to study how wage losses vary across age groups, gender, industry and size of the firm. We also assess differences between switchers and non switchers, and consider the effect of the economic cycle. Our data allows providing original evidence about the smoothing role of the unemployment insurance program, even in a developing country. Our main findings indicate that workers loose around 48% of their pre-displacement wages in the first quarter after displacement, and after five years, losses are still 3%.

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Paper provided by Instituto de Economía - IECON in its series Documentos de Trabajo (working papers) with number 12-10.

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Length: 22 pages
Date of creation: Sep 2012
Date of revision:
Handle: RePEc:ulr:wpaper:dt-10-12
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  1. Ruhm, Christopher J, 1991. "Are Workers Permanently Scarred by Job Displacements?," American Economic Review, American Economic Association, vol. 81(1), pages 319-24, March.
  2. Bruce C. Fallick, 1996. "A review of the recent empirical literature on displaced workers," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 50(1), pages 5-16, October.
  3. Anabela Carneiro & Pedro Portugal, 2006. "Earnings Losses of Displaced Workers: Evidence from a Matched Employer-employee Data Set," CEF.UP Working Papers 0607, Universidade do Porto, Faculdade de Economia do Porto.
  4. repec:clu:wpaper:0708-16 is not listed on IDEAS
  5. Kenneth A. Couch & Dana W. Placzek, 2010. "Earnings Losses of Displaced Workers Revisited," American Economic Review, American Economic Association, vol. 100(1), pages 572-89, March.
  6. Kaplan, David & Martinez, Gabriel & Robertson, Raymond, 2005. "What Happens to Wages After Displacement?," MPRA Paper 3079, University Library of Munich, Germany.
  7. Marcus Eliason, 2012. "Lost jobs, broken marriages," Journal of Population Economics, Springer, vol. 25(4), pages 1365-1397, October.
  8. Alexander Hijzen & Richard Upward & Peter W. Wright, 2010. "The Income Losses of Displaced Workers," Journal of Human Resources, University of Wisconsin Press, vol. 45(1).
  9. Steven J. Davis & Till Von Wachter, 2011. "Recessions and the Costs of Job Loss," Working Papers 2011-009, Becker Friedman Institute for Research In Economics.
  10. Lockwood, Ben, 1991. "Information Externalities in the Labour Market and the Duration of Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 58(4), pages 733-53, July.
  11. Marcus Eliason & Donald Storrie, 2009. "Does Job Loss Shorten Life?," Journal of Human Resources, University of Wisconsin Press, vol. 44(2).
  12. Lori G. Kletzer, 1998. "Job Displacement," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 115-136, Winter.
  13. 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.
  14. Addison, John T & Portugal, Pedro, 1989. "Job Displacement, Relative Wage Changes, and Duration of Unemployment," Journal of Labor Economics, University of Chicago Press, vol. 7(3), pages 281-302, July.
  15. Jukka Appelqvist, 2007. "Wage and Earnings Losses of Displaced Workers in Finland," Discussion Papers 422, Government Institute for Economic Research Finland (VATT).
  16. Kletzer, Lori Gladstein, 1989. "Returns to Seniority after Permanent Job Loss," American Economic Review, American Economic Association, vol. 79(3), pages 536-43, June.
  17. Daniel Sullivan & Till von Wachter, 2009. "Job Displacement and Mortality: An Analysis Using Administrative Data," The Quarterly Journal of Economics, MIT Press, vol. 124(3), pages 1265-1306, August.
  18. Marcus Eliason, 2011. "Income after job loss: the role of the family and the welfare state," Applied Economics, Taylor & Francis Journals, vol. 43(5), pages 603-618.
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