Earnings Losses of Displaced Workers

Authors

Louis S. Jacobson, W.E. Upjohn Institute for Employment ResearchFollow
Robert J. LaLonde, The University of Chicago
Daniel G. Sullivan, Northwestern UniversityFollow

Series

Upjohn Institute Working Paper No. 92-11

**Published Version**

In The American Economic Review 83(4): 685-709

DOI

10.17848/wp92-11

Issue Date

Revised February 1, 1992

Abstract

The 1990-1991 recession has intensified concerns about the consequences of workers' job losses. To estimate the magnitude and temporal pattern of displaced workers' earnings losses, we exploit an unusual administrative data set that includes both employees' quarterly earnings histories and information about their firms. We find that when high-tenure workers separate from distressed firms their long-term losses average 25 percent per year. Further, their losses mount even prior to separation, are not limited to workers in a few industrial sectors, and are substantial even for those who find new jobs in similar firms. This evidence suggests that displaced workers' earnings losses result largely from the loss of some unidentified attribute of the employment relationship.

Sponsorship

This research was funded by the W.E. Upjohn Institute for Employment Research and the Industrial Relations Section at Princeton University.

Subject Areas

LABOR MARKET ISSUES; Job security and unemployment dynamics; Dislocated workers