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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. Gibbons, Robert & Katz, Lawrence F, 1991. "Layoffs and Lemons," Journal of Labor Economics, University of Chicago Press, vol. 9(4), pages 351-380, October.
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    Cited by:

    1. William J. Carrington & Bruce Fallick, 2017. "Why Do Earnings Fall with Job Displacement?," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 56(4), pages 688-722, October.
    2. Bruce 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.).
    3. Appelqvist, Jukka, 2007. "Wage and Earnings Losses of Displaced Workers in Finland," Discussion Papers 422, VATT Institute for Economic Research.
    4. Tian, Xinping & Gong, Jinquan & Zhai, Zhe, 2022. "The effect of job displacement on labor market outcomes: Evidence from the Chinese state-owned enterprise reform," China Economic Review, Elsevier, vol. 72(C).

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