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Lasting or Latent Scars? Swedish Evidence on the Long-Term Effects of Job Displacement

Author

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  • Marcus Eliason

    (CELMS (Centre for European Labour Market Studies), Department of Economics, Göteborg University)

  • Donald Storrie

    (European Foundation for the Improvement of Living and Working Conditions and CELMS, Department of Economics, Göteborg University)

Abstract

Recently improved Swedish register data have made it possible to remedy many weaknesses of previous research on displaced workers. Using linked employer-employee data, we identify all workers displaced in 1987, due to an establishment closure, and follow them over both a predisplacement period of 4 years and a postdisplacement period stretching until 1999. We find that the displaced workers suffer both earnings losses and worsened labor-market position not only during a transitory period of adjustment but also in the longer run. These longer-run effects seem to be driven by an increased sensitivity to subsequent macroeconomic shocks.

Suggested Citation

  • Marcus Eliason & Donald Storrie, 2006. "Lasting or Latent Scars? Swedish Evidence on the Long-Term Effects of Job Displacement," Journal of Labor Economics, University of Chicago Press, vol. 24(4), pages 831-856, October.
    • Handle: RePEc:ucp:jlabec:v:24:y:2006:i:4:p:831-856
    DOI: 10.1086/506487
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    References listed on IDEAS

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