Reconsidering the Consequences of Worker Displacements: Firm Versus Worker Perspective

59 Pages Posted: 6 Jun 2018 Last revised: 21 Feb 2019

See all articles by Aaron Flaaen

Aaron Flaaen

Board of Governors of the Federal Reserve System

Matthew D. Shapiro

University of Michigan at Ann Arbor - Department of Economics; National Bureau of Economic Research (NBER)

Isaac Sorkin

Stanford University - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: 2018-05-04

Abstract

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.

Keywords: Earnings losses, Job loss, Unemployment

JEL Classification: J63, J65, J26, J00

Suggested Citation

Flaaen, Aaron and Shapiro, Matthew D. and Sorkin, Isaac, Reconsidering the Consequences of Worker Displacements: Firm Versus Worker Perspective (2018-05-04). FEDS Working Paper No. 2018-029. Available at SSRN: https://ssrn.com/abstract=3187699 or http://dx.doi.org/10.17016/FEDS.2018.029

Aaron Flaaen (Contact Author)

Board of Governors of the Federal Reserve System ( email )

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HOME PAGE: http://www.federalreserve.gov/econresdata/aaron-b-flaaen.htm

Matthew D. Shapiro

University of Michigan at Ann Arbor - Department of Economics ( email )

and Survey Research Center
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National Bureau of Economic Research (NBER) ( email )

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Isaac Sorkin

Stanford University - Department of Economics ( email )

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STANFORD, CA 94305-6072
United States

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