IDEAS home Printed from https://ideas.repec.org/p/mtu/wpaper/13_03.html
   My bibliography  Save this paper

The Costs of Involuntary Job Loss: Impacts on Workers’ Employment and Earnings

Author

Listed:
  • Sylvia Dixon

    (Labour Group, Ministry of Business, Innovation and Employment)

  • Maré, David C

    (Motu Economic and Public Policy Research)

Abstract

This paper examines the incidence of involuntary job loss and its impact on the employment and earnings of affected workers, using data from the Survey of Families, Incomes and Employment (SoFIE) for the 2002–09 period. It focusses on employees who had been working in their job for at least one year before the job loss. The impact of displacement on employment and earnings was estimated by using a propensity score-matching approach to select similar non-displaced workers and then compare their outcomes. We find that the employment rate of displaced workers was on average 27 percentage points lower 0–1 years after displacement, 14 percentage points lower 1–2 years after, and 8 percentage points lower 2–3 years after, than that of the matched comparison group. The average wage of re-employed displaced workers was 12 percent lower 0–1 years after displacement, 11 percent lower 1–2 years after and 7 percent lower 2–3 years after. Other impacts included increases in unemployment and self-employment, reductions in average weekly hours, and reductions in weekly and annual earnings.

Suggested Citation

  • Sylvia Dixon & Maré, David C, 2013. "The Costs of Involuntary Job Loss: Impacts on Workers’ Employment and Earnings," Working Papers 13_03, Motu Economic and Public Policy Research.
    • Handle: RePEc:mtu:wpaper:13_03
    as

    Download full text from publisher

    File URL: https://motu-www.motu.org.nz/wpapers/13_03.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. 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.
    2. 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.
    3. Peter J. Kuhn (ed.), 2002. "Losing Work, Moving On: International Perspectives on Worker Displacement," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number lwmo.
    4. Zhang, Xuelin & Morissette, Rene & Frenette, Marc, 2007. "Earnings Losses of Displaced Workers: Canadian Evidence from a Large Administrative Database on Firm Closures and Mass Layoffs," Analytical Studies Branch Research Paper Series 2007291e, Statistics Canada, Analytical Studies Branch.
    5. Richard Fabling & David C. Maré, 2012. "Cyclical Labour Market Adjustment in New Zealand: The Response of Firms to the Global Financial Crisis and its Implications for Workers," Working Papers 12_04, Motu Economic and Public Policy Research.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Eliason, Marcus, 2011. "Assistant and auxiliary nurses in crisis times: earnings and employment following public sector job loss in the 1990s," Working Paper Series 2011:1, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    2. Ossi Korkeamäki & Jukka Appelqvist & Tomi Kyyrä, 2007. "Quantile Regression Estimates of the Earnings Losses of Displaced Workers," EcoMod2007 23900045, EcoMod.
    3. Kent Eliasson & Pär Hansson, 2016. "Are workers more vulnerable in tradable industries?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(2), pages 283-320, May.
    4. Arja Jolkkonen & Pertti Koistinen & Arja Kurvinen & Liudmila Lipiäinen & Tapio Nummi & Pekka Virtanen, 2018. "Labour Market Attachment Following Major Workforce Downsizings: A Comparison of Displaced and Retained Workers," Work, Employment & Society, British Sociological Association, vol. 32(6), pages 992-1010, December.
    5. Verho, Jouko, 2008. "Scars of recession: the long-term costs of the Finnish economic crisis," Working Paper Series 2008:9, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    6. Bergemann, Annette & Grönqvist, Erik & Guðbjörnsdóttir, Soffia, 2018. "Diabetes morbidity after displacement," Working Paper Series 2018:15, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    7. Marcus Eliason & Donald Storrie, 2009. "Does Job Loss Shorten Life?," Journal of Human Resources, University of Wisconsin Press, vol. 44(2).
    8. Seim, David, 2019. "On the incidence and effects of job displacement: Evidence from Sweden," Labour Economics, Elsevier, vol. 57(C), pages 131-145.
    9. Meekes, Jordy & Hassink, Wolter, 2020. "Fired and Pregnant: Gender Differences in Job Flexibility Outcomes after Job Loss," IZA Discussion Papers 13779, Institute of Labor Economics (IZA).
    10. Fackler, Daniel & Hank, Eva, 2016. "Who buffers income losses after job displacement? The role of alternative income sources, the family, and the state," IWH Discussion Papers 28/2016, Halle Institute for Economic Research (IWH).
    11. Daniel Fackler & Eva Hank, 2016. "Who Buffers Income Losses after Job Displacement? The Role of Alternative Income Sources, the Family, and the State," SOEPpapers on Multidisciplinary Panel Data Research 863, DIW Berlin, The German Socio-Economic Panel (SOEP).
    12. Morissette, Rene & Ostrovsky, Yuri, 2008. "How Do Families and Unattached Individuals Respond to Layoffs? Evidence from Canada," Analytical Studies Branch Research Paper Series 2008304e, Statistics Canada, Analytical Studies Branch.
    13. Hank, Eva & Fackler, Daniel, 2017. "Who buffers income losses after job displacement? The role of alternative income sources, the family, and the state," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168098, Verein für Socialpolitik / German Economic Association.
    14. 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.
    15. Kyyrä, Tomi & Korkeamäki, Ossi, 2008. "A Distributional Analysis of Displacement Costs in an Economic Depression and Recovery," Discussion Papers 465, VATT Institute for Economic Research.
    16. Alexander Hijzen & Richard Upward & Peter W. Wright, 2010. "The Income Losses of Displaced Workers," Journal of Human Resources, University of Wisconsin Press, vol. 45(1).
    17. 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).
    18. 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.
    19. Yolanda Kodrzycki, 2007. "Using unexpected recalls to examine the long-term earnings effects of job displacement," Working Papers 07-2, Federal Reserve Bank of Boston.
    20. Jose Garcia‐Louzao & Marta Silva, 2024. "Coworker networks and the labor market outcomes of displaced workers: Evidence from Portugal," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 63(3), pages 389-413, July.

    More about this item

    Keywords

    Displaced workers; redundancy; SoFIE; propensity matching;
    All these keywords.

    JEL classification:

    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mtu:wpaper:13_03. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Maxine Watene (email available below). General contact details of provider: https://edirc.repec.org/data/motuenz.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.