Job Ladders and Earnings of Displaced Workers
54 Pages Posted: 31 Oct 2012 Last revised: 30 Dec 2015
Date Written: December 3, 2014
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: Suggested Citation