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Earnings Losses of Displaced Workers

Louis S. Jacobson, Robert J. LaLonde and Daniel G. Sullivan
The American Economic Review
Vol. 83, No. 4 (Sep., 1993), pp. 685-709
Stable URL: http://www.jstor.org/stable/2117574
Page Count: 25
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Earnings Losses of Displaced Workers
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Abstract

We exploit administrative data combining workers' earnings histories with information about their firms to estimate the magnitude and temporal pattern of displaced workers' earnings losses. We find that high-tenure workers separating from distressed firms suffer long-term losses averaging 25 percent per year. In addition, we find that displaced workers' losses: (i) begin mounting before their separations, (ii) depend only slightly on their age and sex, (iii) depend more on local labor-market conditions and their former industries, (iv) are not, however, limited to those in a few sectors, and (v) are large even for those who find new jobs in similar firms.

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