Sources of Displaced Workers’ Long-Term Earnings Losses

By Marta Lachowska, Alexandre Mas, Stephen A. Woodbury. The American Economic Review, 2017

173 citations recorded by the source corpus.

We estimate the magnitudes of reduced earnings, work hours, and wage rates of workers displaced during the Great Recession using linked employer-employee panel data from Washington state. Displaced workers’ earnings losses occurred mainly because hourly wage rates dropped at the time of displacement and recovered sluggishly. Lost employer-specific premiums explain only 17 percent of these losses. Fully 70 percent of displaced workers moved to employers paying the same or higher wage premiums than the displacing employers, but these workers nevertheless suffered substantial wage rate losses. Loss of valuable specific worker-employer matches explains more than one-half of the wage losses. (JEL E32, J22, J31, J63, R23)

Subfields: Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/812c3c3383f8c9b86ad0d9c8d0d014e23bbd2cf8

Citations in the corpus

• Imperfect Competition, Compensating Differentials and Rent Sharing in the U.S. Labor Market (2019, unknown): “For example, Lachowska et al. (2020b) find hourly wage losses of 12 percent and earnings losses of 16 percent five years after a job displacement in data from Washington state.”