Worker Perceptions of Job Insecurity in the Mid-1990s: Evidence from the Survey of Economic Expectations

This paper analyzes the probabilistic measures of job insecurity that have recently become available through the nationwide Survey of Economic Expectations (SEE). Since 1994, employed SEE respondents have been asked questions eliciting their expectations of job loss in the coming year and their expectations of a good outcome should they lose their current job and have to engage in job search. The responses of 3600 persons interviewed from 1994 through early 1998 are analyzed here. It is found that workers vary considerably in their perceptions of job insecurity. Most workers perceive little or no risk but some perceive moderate to high risk. Expectations of job loss tend to decrease markedly with age, but so do expectations of a good outcome should job search become necessary. The net result is that composite job insecurity tends not to vary at all with age. Subjective probabilities of job loss tend to decrease with schooling while subjective probabilities of good search outcomes tend to increase; hence composite job insecurity tends to decrease with schooling. Perceptions of job insecurity vary little by sex but substantially by race. The main differences are that subjective probabilities of job loss among blacks tend to be nearly double those of whites. Self-employed workers see themselves as facing less job insecurity than do those who work for others. Workers tended to perceive less job insecurity in 1996 and 1997 than in 1994 and 1995. Moving beyond descriptive analysis, the paper connects the emiprical findings to modern theories of the labor market. The theory of job search is used to interpret the empirical finding that the distribution of search-outcome expectations is symmetric and quite dispersed.