Job Displacement: Comparative Evidence for Italy

Abstract

This paper estimates long term earnings losses attending displacement of experienced Italian workers exploiting new administrative longitudinal data for Italy. In this dimension, Italian job separators are better off than their equivalents in the study published in 1993 by Jacobson, LaLonde and Sullivan, a benchmark in this research subject. Earnings declines are moderate, even though very persistent, with evidence of a recovery slowdown (a reversion for males) in the long run. Estimates for a subset of workers separating from distressed firms, which more likely track involuntary job terminations, are about twice as large as those for all separators. After displacement, employment patterns of women in the sample of all separators are worse than men's. However, women's earnings comove with time spent out of employment and recover relatively more, so that the gap in earnings disappear over the long run. This may suggest that they are pickier toward job offers; in addition, females' occupations may be of the type that entails more portable skills across jobs but larger turnovers at new jobs. Males, on the contrary, experience a percentage drop in earnings larger than what seems driven by time spent in non-employment, providing some evidence of wage rate losses, especially in the long run.