Abstract
Loss of specific human capital is often identified as a mechanism through which displaced workers might experience permanent drops in earnings after job loss. Research has shown that displaced workers who migrate out of their region of origin have lower earnings than those who do not. This paper extends the discussion on returns to migration by accounting for the type of jobs people get and how related they are to their skills. Using an endogenous treatment model to control for selection bias in migration and career change, we compare displaced stayers with displaced movers in Sweden. Results show that migrants who get a job that matches their occupation- and industry-specific skills display the highest earnings among all displaced workers. If migration is combined with a job mismatch, earning losses are instead observed. This group experiences the lowest earnings among all displaced workers.
Highlights
Workers who lose their jobs due to firm closure may experience persistent earning losses (Couch and Placzek, 2010; Eliason and Storrie, 2006; Jacobson et al, 1993)
The results reported are relative risk ratios compared to the base category
This paper expands the discussion on returns to migration of displaced workers by accounting for the type of jobs they get and how this matches their skills
Summary
Workers who lose their jobs due to firm closure may experience persistent earning losses (Couch and Placzek, 2010; Eliason and Storrie, 2006; Jacobson et al, 1993). We contribute to the literature on returns to migration for displaced workers by examining the importance of job match, in terms of both occupation and industry for wages.
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