Reconsidering the Consequences of Worker Displacements: Firm versus Worker Perspective

Prior literature has established that displaced workers suffer persistent earnings losses by following workers in administrative data after mass layoffs. This literature assumes that these are involuntary separations owing to economic distress. This paper examines this assumption by matching survey...

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Bibliographic Details
Published in:American economic journal. Macroeconomics 2019-04, Vol.11 (2), p.193-227
Main Authors: Flaaen, Aaron, Shapiro, Matthew D., Sorkin, Isaac
Format: Article
Language:English
Subjects:
Economic conditions
Layoffs
Workers
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Summary:Prior literature has established that displaced workers suffer persistent earnings losses by following workers in administrative data after mass layoffs. This literature assumes that these are involuntary separations owing to economic distress. This paper examines this assumption by matching survey data on worker-supplied reasons for separations with administrative data. Workers exhibit substantially different earnings dynamics in mass layoffs depending on the reason for separation. Using a new methodology to account for the increased separation rates across all survey responses during a mass layoff, the paper finds earnings loss estimates that are surprisingly close to those using only administrative data.
ISSN:1945-7707
1945-7715
DOI:10.1257/mac.20170162