Displacement in new economy labor markets: Post-displacement wage loss in high tech versus low tech cities

Abstract

While scholars and politicians tout education as the salve to employment disruptions, we argue that the geography of the new economy, and the social closure mechanisms that geography creates, may be just as important as individuals’ characteristics for predicting post-displacement wage loss (or gain). We use data from the 2012 Displaced Workers ement of the Current Population Survey and from the 2010 United States Census to test hypotheses linking local labor markets in different industrial contexts to post-displacement wage loss. Our results point to age as a closure mechanism, and to the partially protective effect of education in high-tech versus low-tech economic sectors. This study is the first to use national level data to examine how employment in high-tech cities influences post-displacement wages. These findings are relevant both for theorizing about the new economy and for public policy.