Job Ladders and Earnings of Displaced Workers

54 Pages Posted: 31 Oct 2012 Last revised: 30 Dec 2015

See all articles by Pawel Michal Krolikowski

Pawel Michal Krolikowski

Federal Reserve Banks - Federal Reserve Bank of Cleveland

Date Written: December 3, 2014

Abstract

Workers who suffer job displacement experience surprisingly large and persistent earnings losses.This paper proposes an explanation for this robust empirical puzzle in a model of search over match-quality with a significant job ladder. In addition to capturing the depth and persistence of displaced worker earnings losses, the model is able to match a) separation rates by tenure; b) the empirical decomposition of earnings losses into reduced wages and employment; c) observed wage dispersion; d) the pattern of employer-to-employer transitions after layoff; and e) the degree of serial correlation in separations.

Keywords: Displacement, earnings, search, match-quality

JEL Classification: D83, E24, J63, J64

Suggested Citation

Krolikowski, Pawel Michal, Job Ladders and Earnings of Displaced Workers (December 3, 2014). FRB of Cleveland Working Paper No. 15-14, Available at SSRN: https://ssrn.com/abstract=2169033 or http://dx.doi.org/10.2139/ssrn.2169033

Pawel Michal Krolikowski (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Cleveland ( email )

East 6th & Superior
Cleveland, OH 44101-1387
United States

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