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Earnings losses of displaced workers in times of crisis

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  • Nune Hovhannisyan
  • Fabio Méndez

Abstract

We utilize data from the 1979 National Longitudinal Survey of Youth and the Bureau of Labor Statistics to study how the earnings losses experienced by displaced workers vary in times of economic crisis. Relative to an economy that operates at full potential, our results show that a 1% increase in the real gross domestic product gap observed at the time of displacement is associated with an additional increase in the estimated earnings losses experienced by displaced workers of approximately 4.3% in the year immediately following displacement, and with similar increases in the estimated losses for up to 5 years after.

Suggested Citation

  • Nune Hovhannisyan & Fabio Méndez, 2023. "Earnings losses of displaced workers in times of crisis," Contemporary Economic Policy, Western Economic Association International, vol. 41(3), pages 555-567, July.
    • Handle: RePEc:bla:coecpo:v:41:y:2023:i:3:p:555-567
    DOI: 10.1111/coep.12605
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    References listed on IDEAS

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    1. Jacobson, Louis S & LaLonde, Robert J & Sullivan, Daniel G, 1993. "Earnings Losses of Displaced Workers," American Economic Review, American Economic Association, vol. 83(4), pages 685-709, September.
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    3. Louis S. Jacobson & Robert J. LaLonde & Daniel G. Sullivan, 1993. "Long-term earnings losses of high-seniority displaced workers," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 17(Nov), pages 2-20.
    4. Neal, Derek, 1995. "Industry-Specific Human Capital: Evidence from Displaced Workers," Journal of Labor Economics, University of Chicago Press, vol. 13(4), pages 653-677, October.
    5. Steven J. Davis & Till Von Wachter, 2011. "Recessions and the Costs of Job Loss," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 42(2 (Fall)), pages 1-72.
    6. Stevens, Ann Huff, 1997. "Persistent Effects of Job Displacement: The Importance of Multiple Job Losses," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages 165-188, January.
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