Long-run wage and earnings losses of displaced workers

Abstract

Displacement-related losses are estimated using National Longitudinal Survey of Youth data that span the years 1979–2000. The typical displaced worker faces losses of $34 065 during the period 4 years prior through 5 years following displacement. Proportionally, this represents a 10.8% loss compared to earnings of similar nondisplaced workers over the period. Considerable variation in losses is reported across worker types. Union, male and more mature workers suffer greater losses, respectively, than do their nonunion, female and younger counterparts. College graduates and high school dropouts are found to suffer lower losses compared to high school diploma holders and those who completed some college.

Notes

¹ During the 1979–83 survey years, no distinction was made for job loss due to plant closure. For these years, we define a worker as having been displaced if the reason cited for leaving the job as ‘layoff’.

² The upper bound is due to top-coding in the NLSY79 data. The lower bound is based on annual earnings if an individual was employed, on average, 25 h per week for 50 weeks each year at a real wage of $3. The US Consumer Price Index was employed, with 1995 set as the base year, to deflate nominal values.