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

Author

Listed:
  • 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)

Abstract

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%.

Suggested Citation

  • Verónica Amarante & Rodrigo Arim & Andrés Dean, 2012. "The effects of being out of the labor market on subsequent wages: evidence for Uruguay," Documentos de Trabajo (working papers) 12-10, Instituto de Economia - IECON.
    • Handle: RePEc:ulr:wpaper:dt-10-12
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    References listed on IDEAS

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    11. Marcus Eliason, 2012. "Lost jobs, broken marriages," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(4), pages 1365-1397, October.
    12. Steven J. Davis & Till Von Wachter, 2011. "Recessions and the Costs of Job Loss," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 42(2 (Fall)), pages 1-72.
    13. Kletzer, Lori Gladstein, 1989. "Returns to Seniority after Permanent Job Loss," American Economic Review, American Economic Association, vol. 79(3), pages 536-543, June.
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    15. Bucheli, Marisa & Furtado, Magdalena, 2001. "Impacto del desempleo sobre el salario: una estimación de la pérdida salarial para Uruguay," Oficina de la CEPAL en Montevideo (Estudios e Investigaciones) 28660, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
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    Cited by:

    1. Mariano Bosch, 2016. "Does unemployment insurance offer incentives to take jobs in the formal sector?," IZA World of Labor, Institute of Labor Economics (IZA), pages 300-300, October.
    2. -, 2014. "Estudio Económico de América Latina y el Caribe 2014: desafíos para la sostenibilidad del crecimiento en un nuevo contexto externo," Estudio Económico de América Latina y el Caribe, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 36970 edited by Cepal, September.
    3. Kaldewei, Cornelia & Weller, Jürgen, 2013. "Empleo, crecimiento sostenible e igualdad," Macroeconomía del Desarrollo 145, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    4. -, 2014. "Economic Survey of Latin America and the Caribbean 2014: Challenges to sustainable growth in a new external context," Estudio Económico de América Latina y el Caribe, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 37033 edited by Eclac, September.
    5. Verónica Alaimo & Mariano Bosch & David S. Kaplan & Carmen Pagés & Laura Ripani, 2015. "Jobs for Growth," IDB Publications (Books), Inter-American Development Bank, number 90977, February.
    6. Andrés Dean & Estefaní­a Galván & Ivone Perazzo, 2014. "¿Acceden al subsidio por desempleo los asalariados rurales en Uruguay? Análisis de la situación actual y simulación de esquemas alternativos," Documentos de Trabajo (working papers) 14-22, Instituto de Economia - IECON.
    7. -, 2014. "Inestabilidad y desigualdad: La vulnerabilidad del crecimiento en América Latina y el Caribe," Libros de la CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 128 edited by Cepal.
    8. Verónica Amarante & Andrés Dean, 2012. "Dinámica del mercado laboral uruguayo," Documentos de Trabajo (working papers) 12-17, Instituto de Economia - IECON.
    9. Luis Beccaria & Roxana Maurizio & Martin Trombetta & Gustavo Vázquez, 2016. "Una evaluación del efecto scarring en Argentina," Revista Desarrollo y Sociedad, Universidad de los Andes - CEDE, vol. 77, August.

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    More about this item

    Keywords

    Wage losses; Displacement;

    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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