How Will Older Workers Who Lose Their Jobs during the Great Recession Fare in the Long-Run?

37 Pages Posted: 26 Nov 2013

See all articles by Matthew S. Rutledge

Matthew S. Rutledge

Boston College, Center for Retirement Research

Natalia Orlova

Boston College, Center for Retirement Research

Anthony Webb

Boston College - Center for Retirement Research

Multiple version iconThere are 2 versions of this paper

Date Written: March 15, 2013

Abstract

In economic downturns prior to the Great Recession, workers over age 50 had escaped relatively unscathed. But the unemployment rate for older workers soared to record highs during the Great Recession. This paper projects how older workers will fare across a broad set of financial outcomes over the remainder of this decade. The model estimates how these outcomes differ between individuals who remained employed and those who were displaced during the recession, controlling for their demographic characteristics. We also seek to determine whether there is any variation in their financial outcomes based on the nature of their layoffs – mass versus individual layoffs – and whether labor market conditions played a role in these outcomes. First, the results show that displaced workers are projected to be significantly worse off: their earnings are 14-19 percent lower over the remainder of this decade, financial assets are 22-30 percent lower, and they are up to 8 percent more likely to experience another layoff. Projections also indicate that older Americans will continue to feel the effects of the Great Recession and that labor force participation, earnings and financial assets all will be lower than they would have been after a milder recession like the one in 2001-2003. Second, although the model allows for differences in the nature of layoffs and in local labor market conditions, there is neither evidence that workers subject to mass layoffs are of higher average quality nor evidence that outcomes are worse in locations hit by more severe recessions.

Suggested Citation

Rutledge, Matthew S. and Orlova, Natalia and Webb, Anthony, How Will Older Workers Who Lose Their Jobs during the Great Recession Fare in the Long-Run? (March 15, 2013). Netspar Discussion Paper No. 03/2013-064. Available at SSRN: https://ssrn.com/abstract=2359413 or http://dx.doi.org/10.2139/ssrn.2359413

Matthew S. Rutledge

Boston College, Center for Retirement Research ( email )

Boston, MA
United States

HOME PAGE: http://crr.bc.edu/researchers/matthew_s_rutledge.html

Natalia Orlova

Boston College, Center for Retirement Research ( email )

Boston, MA
United States

Anthony Webb (Contact Author)

Boston College - Center for Retirement Research ( email )

Fulton Hall 550
Chestnut Hill, MA 02467
United States

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