Are There Hidden Costs Associated With Conducting Layoffs? The Impact of Reduction‐in‐Force and Layoff Notices on Teacher Effectiveness

Abstract

AbstractFew studies examine employee responses to layoff‐induced unemployment risk; none that we know of quantify the impact of job insecurity on individual employee productivity. Using data from the Los Angeles Unified School District (LAUSD) and Washington State during the Great Recession, we provide the first evidence about the impact of the layoff process on teacher productivity. In both sites we find that teachers impacted by the layoff process are less productive than those who do not face layoff‐induced job threat. LAUSD teachers who are laid off and then rehired to return to the district are less productive in the two years following the layoff. Washington teachers who are given a reduction‐in‐force (RIF) notice and are then not laid off have reduced effectiveness in the year of the RIF. We argue that these results are likely driven by impacts of the layoff process on teachers’ job commitment and present evidence to rule out alternate explanations.