Displaced Workers Survey Research Articles

Heterogeneous Effects of Job Displacement on Earnings

This paper considers how the effect of job displacement varies across different individuals. In particular, our interest centers on features of the distribution of the individual-level effect of job displacement. Identifying features of this distribution is particularly challenging—e.g., even if we could randomly assign workers to be displaced or not, many of the parameters that we consider would not be point identified. We exploit our access to panel data, and our approach relies on comparing outcomes of displaced workers to outcomes the same workers would have experienced if they had not been displaced and if they maintained the same rank in the distribution of earnings as they had before they were displaced. Using data from the Displaced Workers Survey, we find that displaced workers earn about $157 per week less, on average, than they would have earned if they had not been displaced. We also find that there is substantial heterogeneity. We estimate that 42% of workers have higher earnings than they would have had if they had not been displaced and that a large fraction of workers have experienced substantially more negative effects than the average effect of displacement. Finally, we also document major differences in the distribution of the effect of job displacement across education levels, sex, age, and counterfactual earnings levels. Throughout the paper, we rely heavily on quantile regression. First, we use quantile regression as a flexible (yet feasible) first step estimator of conditional distributions and quantile functions that our main results build on. We also use quantile regression to study how covariates affect the distribution of the individual-level effect of job displacement.

Heterogeneous Effects of Job Displacement on Earnings

This paper considers how the effect of job displacement varies across different individuals. In particular, our interest centers on features of the distribution of the individual-level effect of job displacement. Identifying features of this distribution is particularly challenging -- e.g., even if we could randomly assign workers to be displaced or not, many of the parameters that we consider would not be point identified. We exploit our access to panel data, and our approach relies on comparing outcomes of displaced workers to outcomes the same workers would have experienced if they had not been displaced and if they maintained the same rank in the distribution of earnings as they had before they were displaced. Using data from the Displaced Workers Survey, we find that displaced workers earn about $157 per week less than they would have earned if they had not been displaced. We also find that there is substantial heterogeneity. We estimate that 42% of workers have higher earnings than they would have had if they had not been displaced and that a large fraction of workers have substantially lower earnings than the average effect of displacement. Finally, we also document major differences in the distribution of the effect of job displacement across education levels, sex, age, and counterfactual earnings levels. Throughout the paper, we rely heavily on quantile regression. First, we use quantile regression as a flexible (yet feasible) first step estimator of conditional distributions and quantile functions that our main results build on. We also use quantile regression to study how covariates affect the distribution of the individual-level effect of job displacement.

The Effect of Affordable Care Act Medicaid Expansion on Post-Displacement Labor Supply Among the Near-Elderly

Expanded health insurance coverage under the Affordable Care Act (ACA) provides alternative channels to obtain health insurance coverage outside employment, which in theory may affect whether people want to work, how much they work, and the sorting of individuals into jobs. Although health insurance exchanges are available in all states, ACA Medicaid expansion is only available in states that chose to expand Medicaid coverage. The state-level variation in timing of Medicaid expansion provides a quasi-experiment setting that can be used to examine how health insurance coverage affected labor supply. In this paper, I study how Medicaid expansion affects the labor supply and re-employment outcomes of displaced (involuntarily unemployed) workers who are near-elderly, low-income, non-married, childless, and non-disabled. Data from 2011-2016 waves of monthly Current Population Survey (CPS) as well as 2010-2016 waves of Displaced Workers Survey (DWS) are used. Results from a discrete-choice model using the CPS suggest that, some displaced workers in expansion states became less likely to exit unemployment to employment while some other became more likely to exit unemployment to not-in-labor-force immediately following Medicaid expansion. While robustness tests suggest this may partly be attributed to state-level idiosyncrasies, my results reject large and persistent effect of Medicaid expansion on unemployment exits. The DWS does not have enough statistical power to identify the difference in reemployment outcomes between displaced workers in expansion and non-expansion states.

Employment, Hours, and Earnings Consequences of Job Loss: US Evidence from the Displaced Workers Survey

Data are used from the 1984–2016 Displaced Workers Surveys (DWS) to investigate the incidence and consequences of job loss, 1981–2015. These data show a record high rate of job loss in the Great Re...

Job Loss in the Great Recession and its Aftermath: U.S. Evidence from the Displaced Workers Survey

The Great Recession from December 2007 to June 2009 is associated with a dramatic weakening of the labor market from which, by some measures, it has not completely recovered. I use data from the Displaced Workers Survey (DWS) from 1984-2014 to investigate the incidence and consequences of job loss from 1981-2013. In particular, the 2010, 2012, and 2014 DWSs provide a window through which to examine the experience of job losers in the Great Recession and its aftermath and to compare their experience to that of earlier job losers. These data show a record high rate of job loss in the Great Recession, with almost one in six workers reporting having lost a job in the 2007-2009 period, that has not yet returned to pre-recession levels. The employment consequences of job loss are also very serious during this period with very low rates of reemployment and difficulty finding full-time employment. The reduction in weekly earnings for those job losers during the 2007-2013 period who were able to find new employment are not unusually large by historical standards.

Outsourcing: mass layoffs and displaced workers' experiences

PurposeOutsourcing of information technology jobs outside the USA has resulted in social costs in the form of mass layoffs and displaced workers. The purpose of this paper is to show the social cost of outsourcing from a transaction cost economics (TCE) perspective.Design/methodology/approachThe paper analyses the incidences of mass layoffs in sectors prone to outsourcing and its consequences on displaced workers. Mass Layoff Statistics (MLS) and the Displaced Workers Survey (DWS) data generated by the Bureau of Labor Statistics (BLS), USA, between 1996 and 2010, are examined for this purpose.FindingsOutsourcing as a reason for mass layoffs has continued to persist up until 2010. Displaced workers experienced earnings losses after job losses and reemployment. The more educated workers had higher post displacement reemployment rates, while older persons suffered the most earnings losses.Research limitations/implicationsThe data pertain to the period 1996 to 2010, including the “Dot Com Bubble Bust” and the “Great Recession.” Changes in data collection methods by BLS over this time period makes it difficult to compare some of the data.Practical implicationsFor policy makers, managers and workers, this study focuses attention on the outsourcing by information technology dependent sectors and the accompanying social costs in the form of displaced workers.Originality/valueMost papers focus on the efficiency gains of outsourcing but this paper focuses attention on the social cost of outsourcing, which is under‐researched and often overlooked.

Unemployment in the Great Recession: Did the Housing Market Crisis Prevent the Unemployed from Moving to Take Jobs?

The labor market in the Great Recession and its aftermath is characterized by great difficulty in escaping unemployment. I present two empirical analyses of a particular explanation for that difficulty, that the housing market crisis has prevented the unemployed from selling their homes and moving to take new jobs. First, I examine post-job-loss mobility rates by home ownership status using data from the Displaced Workers Survey. Second, I examine mobility rates for unemployed homeowners and renters from the month-to-month CPS match. Neither analysis provides any support for the idea that the housing market crisis has reduced mobility of the unemployed.

Job Loss in the Great Recession: Historical Perspective from the Displaced Workers Survey, 1984-2010

The Great Recession from December 2007 to June 2009 is associated with a dramatic weakening of the labor market from which the labor market is now only slowly recovering. The unemployment rate remains stubbornly high and durations of unemployment are unprecedentedly long. I use data from the Displaced Workers Survey (DWS) from 1984-2010 to investigate the incidence and consequences of job loss from 1981-2009. In particular, the January 2010 DWS, which captures job loss during the 2007-2009 period, provides a window through which to examine the experience of job losers in the Great Recession and to compare their experience to that of earlier job losers. These data show a record high rate of job loss, with almost one in six workers reporting having lost a job in the 2007-2009 period. The consequences of job loss are also very serious during this period with very low rates of reemployment, difficulty finding full-time employment, and substantial earnings losses.

Offshoring of white‐collar jobs in the United States and gendered outcomes

PurposeSince the mid‐1990s, offshore production has become increasingly important in white‐collar, service sector activities in the US economy. This development coincided with a stagnant gender wage gap in the service sector and a slowdown in the narrowing of the overall US gender wage gap over this period. This paper aims to categorize white‐collar service sector occupations into two groups based on whether an occupation is at risk of being offshored and to assess the relative contribution of these two groupings, through their employment and wages, to the trends in the gender wage gap within the service sector and the US economy between 1995 and 2005.Design/methodology/approachStandard occupational decomposition methods are applied to Current Population Survey and Displaced Workers Survey data.FindingsThe findings show that in occupations at risk of being offshored, low‐wage women's employment declined, leading to an artificial increase in the average wage of the remaining women thereby narrowing the gender wage gap. This improvement in the gender wage gap was offset by the relative growth of high‐wage male employment in at‐risk occupations and the widening of the gender wage gap within not‐at‐risk occupations.Originality/valueThese findings contribute to the growing literature on the causes of the stagnation of the US gender wage gap in the 1990s.

The Locus of Racial Disadvantage in the Labor Market

Using a pooled sample constructed from recent installments of the Displaced Workers Survey, this study examines the racial disparities in postdisplacement outcomes while controlling for the predisplacement experience and earnings of individual workers. It finds no racial difference in the reemployment wage, but there is a large racial disparity in the chances of reemployment among workers with equivalent characteristics and experience. This lower reemployment rate of displaced black workers may be due to individual differences in search behavior, but it is also consistent with contemporary accounts of hiring discrimination.

Displacement, Asymmetric Information and Heterogeneous Human Capital

In a seminal paper Gibbons and Katz (1991; GK) develop and empirically test an asymmetric information model of the labor market. The model predicts that wage losses following displacement should be larger for layoffs than for plant closings, which was borne out by data from the Displaced Workers Survey (DWS). In this paper, we take advantage of many more years of DWS data to examine how the difference in wage losses across plant closing and layoff varies with race and gender. We find that the differences between white males and the other groups are striking and complex. The lemons effect of layoff holds for white males as in the GK model, but not for the other three demographic groups (white females, black females, and black males). These three all experience a greater decline in earnings at plant closings than at layoffs. This results from two reinforcing effects. First, plant closings have substantially more negative effects on minorities than on whites. Second, layoffs seem to have more negative consequences for white men than the other groups. These findings suggest that the GK asymmetric information model is not sufficient to explain all of the data. We augment the model with heterogeneous human capital and show that this model can explain the findings. We also provide some additional evidence suggestive that both asymmetric information and heterogeneous human capital are important. In support of both explanations, we demonstrate that the racial and gender effects are surprisingly robust to region, industry and occupation controls. To look at the asymmetric information, we make use of the Civil Rights Act of 1991 which induced employers to lay off protected workers in mass layoffs rather than fire them for cause. As a result, relative to whites, a layoff would be a more negative signal for blacks after 1991 than before. If information is important, this would in turn imply that blacks experience a relatively larger loss in earnings at layoffs after 1991 than prior; and that's what we find in the data. In addition, as further evidence for heterogeneous human capital, we document for the first time in the literature that the two types of layoffs reported in the DWS data, namely layoffs due to slack work and position abolished have very different features when compared to plant closings. Finally, we simulate our model and show that it can match the data.

Recall bias in the displaced workers survey: Are layoffs really lemons?

This paper examines how the extent of recall bias in the Displaced Workers Surveys affects the often-cited empirical results found by Gibbons and Katz [Gibbons, R., Katz, L.F., 1991. Layoffs and lemons. Journal of Labor Economics 9 (4), 351−380] for the lemons effect of layoffs. Their finding that workers displaced by layoffs experience larger wage losses than do those displaced by plant closings is not due to the stigma attached to the layoff events. Rather it partly stems from recall bias in the 1984 and 1986 DWS, but mostly reflects the fact that workers displaced by layoffs have significantly higher predisplacement wage-tenure profiles than do those displaced by plant closings, while there is no such difference in postdisplacement wage-tenure profiles. A similar analysis using the 2000 and 2002 DWS shows that predisplacement wage losses are not different between workers displaced by layoffs and those displaced by plant closings.

Do Terminated Employees Catch Up? Evidence from the Displaced Workers Survey

Abstract No abstract available.

From Displacement to Reemployment: Job Acquisition in the Flexible Economy

This article examines the duration to reemployment after displacement. We use partial likelihood estimation of proportional hazard models to examine effects on the duration to reemployment. Using theCurrent Population Survey: Displaced Workers Survey(1992), we assess the relative utility of theories of reindustrialization and develop an alternative theory of hyperexploitability. In general, the analyses provide greater support for our hyperexploitability, rather than the reindustrialization, explanation for reemployment dynamics.

Mandatory Notice and the Jobless Durations of Displaced Workers

Using Canadian Displaced Workers Survey data for 1981–86, the author studies the effect of Canadian advance notice laws on displaced workers' jobless durations. By considering statutory notice requirements, rather than actual notice provision, the author is able to avoid the problems associated with the endogeneity of notice that have characterized previous studies of this question. So-called group notice laws, which apply to large-scale layoffs, reduced the jobless durations of plant closure victims, but individual notice laws, which apply to all layoffs in some jurisdictions but only small-scale layoffs in others, had little effect. One possible explanation for this difference is that workers who lose their jobs while their plant remains open may have stronger expectations of being rehired than do other displaced workers, and may therefore delay job search with or without notice.

Mandatory Notice and the Jobless Durations of Displaced Workers

Using Canadian Displaced Workers Survey data for 1981-86, the author studies the effect of Canadian advance notice laws on displaced workers' jobless durations. So-called group notice laws, which apply to large-scale layoffs, reduced the jobless durations of plant closure victims, but individual notice laws, which apply to all layoffs in some jurisdictions but only small-scale layoffs in others, had little effect. One possible explanation for this difference is that workers who lose their jobs while their plant remains open may have stronger expectations of being rehired than do other displaced workers and may therefore delay job search with or without notice.

The determinants of jobless durations of displaced workers in Canada

A hazard model of jobless durations is estimated using data from the 1986 Canadian Displaced Workers Survey. Hypothesis concerning demographic difference in reeployment transitions are testes and the effect of certain labour market and policy variables is assested. The findings are compared with those published in studies using the United States Displayed Workers Survey,and attempt to exploit certain information which is unavailable in the US data set. The demographic variables play an important ans expected role in determining the distribution of jobless spels. Characterstic pertaining to the former job,such as union status and wage level,also have explanatory power. Contrary to the findings of US studies,the length of tenure of the former job is insignificant,and the less difference in duration is found for workers who lost their jobs due to a plant closure as opposed to those displaced via a partial layoff.

Discrimination and the unemployment durations of white and black males

In this study we develop a model to decompose the longer unemployment duration of blacks into discriminatory and non-discriminatory components. By extending Becker's theory of discrimination to job-search theory, the discriminatory component is seen to be the result of two separate effects. First, a white treatment advantage shortens the unemployment duration of whites because they receive more frequent and higher wage offers than would prevail in the absence of discrimination for working alongside blacks. Second, a black treatment disadvantage lengthens the jobless spell of blacks because blacks receive lower wage offers than would prevail without discrimination as discriminating employers extract quasi-rents from their labour. We estimate our model using date from the CPS Displaced Workers Survey. The results show that 3.81 of the 4.58 weeks longer unemployment spell for blacks is due to discrimination, with 3.11 weeks resulting from the white treatment advantage, and 0.7 weeks emanating from the black ...

The Impact of Advance Notice: A Rejoinder

N our recent study (ILR Review, July 1991), using data from the 1988 CPS Displaced Workers Survey, we found that workers who were given at least 60 days' written advance notification of layoffs due to plant closings or relocations had significantly lower reemployment earnings losses and a lower probability of experiencing positive unemployment spells than did other workers. The implication from the results of our study was that the hardships suffered by workers who lose their jobs due to plant closings or relocations are likely to be lessened if they receive 60 or more days of written notice, rather than less formal types of notification or written notice of lesser duration. These results certainly appear to be supportive of the Worker Adjustment and Retraining Notification Act (WARN) of 1988, which requires employers with 100 or more employees to provide written advance notice of at least 60 days to workers who are to be laid off due to a plant closing or relocation. In this issue of the ILR Review, Addison and Portugal report finding that written advance notice of layoffs due to plant closings has a significant effect in lowering the probability of experiencing positive unemployment spells for white-collar workers, but no similar significant effect for blue-collar workers. In reference to our study, they assert that they find no support for Nord and Ting's general proposition that longer intervals of written notice increase the probability of avoiding joblessness (p. 658) Also in this issue,

The Impact of Advance Notice of Plant Closings on Earnings and the Probability of Unemployment

The authors analyze data from the 1988 CPS Displaced Workers Survey to assess the effects of written advance notice of plant closings on post-displacement employment and earnings. The results suggest that notification was effective in reducing reemployment earnings losses and the probability of post-displacement unemployment only when it was given at least two months before the plant closing. This finding, the authors conclude, confirms that the 60-day advance notice of plant closings required of large employers by the Worker Adjustment and Retraining Notification Act of 1988 is appropriate.