The Intergenerational Effect of Worker Displacement

44 Pages Posted: 25 Oct 2005 Last revised: 31 Aug 2010

See all articles by Philip Oreopoulos

Philip Oreopoulos

University of Toronto - Department of Economics; National Bureau of Economic Research (NBER); Canadian Institute for Advanced Research (CIFAR)

Marianne Page

University of California, Davis

Ann Huff Stevens

University of California, Davis - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: August 2005

Abstract

This paper uses variation induced by firm closures to explore the intergenerational effects of worker displacement. Using a Canadian panel of administrative data that follows almost 60,000 father-child pairs from 1978 to 1999 and includes detailed information about the firms at which the father worked, we construct narrow treatment and control groups whose fathers had the same level of permanent income prior to 1982 when some of the fathers were displaced. We demonstrate that job loss leads to large permanent reductions in family income. Comparing outcomes among individuals whose fathers experienced an employment shock to outcomes among individuals whose fathers did not, we find that children whose fathers were displaced have annual earnings about 9% lower than similar children whose fathers did not experience an employment shock. They are also more likely to receive unemployment insurance and social assistance. The estimates are driven by the experiences of children whose family income was at the bottom of the income distribution, and are robust to a number of specification checks.

Suggested Citation

Oreopoulos, Philip and Page, Marianne and Stevens, Ann, The Intergenerational Effect of Worker Displacement (August 2005). NBER Working Paper No. w11587. Available at SSRN: https://ssrn.com/abstract=795271

Philip Oreopoulos (Contact Author)

University of Toronto - Department of Economics ( email )

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Toronto, Ontario M5S 3G7
Canada

National Bureau of Economic Research (NBER)

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Canadian Institute for Advanced Research (CIFAR)

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Marianne Page

University of California, Davis ( email )

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Davis, CA 95616-8578
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530-752-1551 (Phone)

Ann Stevens

University of California, Davis - Department of Economics ( email )

One Shields Drive
Davis, CA 95616-8578
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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