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Displacement, Asymmetric Information, and HeterogeneousHuman Capital

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  • Luojia Hu
  • Christopher Taber

Abstract

Gibbons and Katz's asymmetric information model of the labormarket predicts that wage losses following displacement should belarger for layoffs than for plant closings. This was borne out intheir empirical work. In this article, we examine how the differencein wage losses across plant closing and layoff varies with race andgender. We find that the basic prediction by Gibbons and Katz holdsonly for white males. We augment their asymmetric information modelwith heterogeneous human capital and show that this augmented modelcan match the data. (c) 2011 by The University of Chicago. Allrights reserved.

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  • Luojia Hu & Christopher Taber, 2011. "Displacement, Asymmetric Information, and HeterogeneousHuman Capital," Journal of Labor Economics, University of Chicago Press, vol. 29(1), pages 113-152, January.
    • Handle: RePEc:ucp:jlabec:v:29:y:2010:i:1:p:113-152
    DOI: 10.1086/656373
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    References listed on IDEAS

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    Cited by:

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    2. Roland G. Fryer, Jr. & Devah Pager & Jörg L. Spenkuch, 2013. "Racial Disparities in Job Finding and Offered Wages," Journal of Law and Economics, University of Chicago Press, vol. 56(3), pages 633-689.
    3. Kunze, Astrid & Troske, Kenneth R., 2012. "Life-cycle patterns in male/female differences in job search," Labour Economics, Elsevier, vol. 19(2), pages 176-185.
    4. Atkins, Ryan & Favreau, Charles, 2022. "The effects of layoffs and plant closings on manufacturers’ market value," International Journal of Production Economics, Elsevier, vol. 245(C).
    5. Jérôme Adda & Christian Dustmann & Joseph-Simon Görlach, 2022. "The Dynamics of Return Migration, Human Capital Accumulation, and Wage Assimilation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 89(6), pages 2841-2871.
    6. Jens MohrenweiserBy & Gabriele Wydra-Somaggio & Thomas Zwick, 2020. "Information advantages of training employers despite credible training certificates," Oxford Economic Papers, Oxford University Press, vol. 72(3), pages 651-671.
    7. Asquith, Brian & Goswami, Sanjana & Neumark, David & Rodriguez-Lopez, Antonio, 2019. "U.S. job flows and the China shock," Journal of International Economics, Elsevier, vol. 118(C), pages 123-137.
    8. Athey, Susan & Simon, Lisa K. & Skans, Oskar N. & Vikstrom, Johan & Yakymovych, Yaroslav, 2023. "The Heterogeneous Earnings Impact of Job Loss across Workers, Establishments, and Markets," Research Papers 4148, Stanford University, Graduate School of Business.
    9. Meekes, Jordy & Hassink, Wolter H.J., 2019. "The role of the housing market in workers′ resilience to job displacement after firm bankruptcy," Journal of Urban Economics, Elsevier, vol. 109(C), pages 41-65.
    10. J. Meekes & W.H.J. Hassink, 2016. "The role of the housing market in workers’ resilience to job displacement after firm bankruptcy," Working Papers 16-10, Utrecht School of Economics.
    11. Emiko Usui & Seik Kim, 2013. "Employer Learning, Job Mobility, and Wage Dynamics," 2013 Meeting Papers 912, Society for Economic Dynamics.
    12. Kim, Taehoon, 2019. "Signaling Effects of Layoffs in South Korea," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 60(2), pages 163-188, December.
    13. William J. Carrington & Bruce Fallick, 2017. "Why Do Earnings Fall with Job Displacement?," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 56(4), pages 688-722, October.
    14. Meekes, Jordy & Hassink, Wolter, 2017. "The Role of the Housing Market in Workers' Resilience to Job Displacement after Firm Bankruptcy," IZA Discussion Papers 10894, Institute of Labor Economics (IZA).
    15. Seik Kim & Emiko Usui, 2021. "Employer learning, job changes, and wage dynamics," Economic Inquiry, Western Economic Association International, vol. 59(3), pages 1286-1307, July.
    16. Núria Rodríquez-Planas, 2011. "Displacement, Signaling, and Recall Expectations," Working Papers 550, Barcelona School of Economics.
    17. Siddique, Zahra, 2008. "Caste Based Discrimination: Evidence and Policy," IZA Discussion Papers 3737, Institute of Labor Economics (IZA).
    18. Astrid Kunze & Kenneth R. Troske, 2015. "Gender differences in job search among young workers: A study using displaced workers in the United States," Southern Economic Journal, John Wiley & Sons, vol. 82(1), pages 185-207, July.
    19. Rao, Neel, 2016. "Asymmetric information and search frictions: A neutrality result," Economics Letters, Elsevier, vol. 147(C), pages 138-141.

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    More about this item

    JEL classification:

    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • J7 - Labor and Demographic Economics - - Labor Discrimination

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