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Earnings Losses of Displaced Workers in the 1990s

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  • Robert F. Schoeni
  • Michael Dardia

Abstract

The large-scale downsizings of the 1990s has renewed interest in the earnings losses of displaced workers. This study uses administrative data to follow 833,004 workers in California between 1989 and 1994, providing estimates of the extent of losses in quarterly earnings associated with the recent downsizings. Patterns of earnings loss that are similar to those found in studies using different data for different regions and periods are documented. However, we do not find that earnings decline substantially prior to displacement, which has been found in previous research. The study also finds that earnings losses: (1) vary substantially among workers, (2) differ by the period of displacement, (3) are related to the economic conditions at the time of displacement, (4) vary by firm size, industry of new employment, and the number of subsequent separations, (5) are similar within versus across firms, and (6) in the long-run are 17 to 25 percent. The effects on quarterly earnings versus hourly wages are also explored.

Suggested Citation

  • Robert F. Schoeni & Michael Dardia, 1997. "Earnings Losses of Displaced Workers in the 1990s," JCPR Working Papers 8, Northwestern University/University of Chicago Joint Center for Poverty Research.
  • Handle: RePEc:wop:jopovw:8
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    References listed on IDEAS

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    1. Jacobson, Louis S & LaLonde, Robert J & Sullivan, Daniel G, 1993. "Earnings Losses of Displaced Workers," American Economic Review, American Economic Association, vol. 83(4), pages 685-709, September.
    2. Carrington, William J & Zaman, Asad, 1994. "Interindustry Variation in the Costs of Job Displacement," Journal of Labor Economics, University of Chicago Press, vol. 12(2), pages 243-275, April.
    3. Gibbons, Robert & Katz, Lawrence F, 1991. "Layoffs and Lemons," Journal of Labor Economics, University of Chicago Press, vol. 9(4), pages 351-380, October.
    4. David S. Evans & Linda S. Leighton, 1995. "Retrospective Bias in the Displaced Worker Surveys," Journal of Human Resources, University of Wisconsin Press, vol. 30(2), pages 386-396.
    5. William J. Carrington, 1993. "Wage Losses for Displaced Workers: Is It Really the Firm That Matters?," Journal of Human Resources, University of Wisconsin Press, vol. 28(3), pages 435-462.
    6. Ann Huff Stevens, 1995. "Long-Term Effects of Job Displacement: Evidence from the Panel Study of Income Dynamics," NBER Working Papers 5343, National Bureau of Economic Research, Inc.
    7. Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, vol. 56(2), pages 259-293, March.
    8. Topel, Robert, 1990. "Specific capital and unemployment: Measuring the costs and consequences of job loss," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 33(1), pages 181-214, January.
    9. Neal, Derek, 1995. "Industry-Specific Human Capital: Evidence from Displaced Workers," Journal of Labor Economics, University of Chicago Press, vol. 13(4), pages 653-677, October.
    10. 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.
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    Cited by:

    1. Bruce C. 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.).
    2. repec:bla:indres:v:56:y:2017:i:4:p:688-722 is not listed on IDEAS
    3. Appelqvist, Jukka, 2007. "Wage and Earnings Losses of Displaced Workers in Finland," Discussion Papers 422, VATT Institute for Economic Research.

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