displacement

Author
Abstract

I focus on two aspects of Job loss. First, I examine evidence on the
incidence of job loss by worker and job characteristics including age,
education, race, sex, industry, and tenure over the period from 1982 to 1991.
Second, I examine the cost of job loss to workers in the form of 1) lower
post-displacement employment probabilities, 2) lower probabilities of
full-time employment for re—employed workers, and 3) lower earnings for
full-time workers.
Using data from Displaced Workers Surveys (DWS) from 1984 through 1992
to study job loss from 1982-91, I find that older workers and more educated
workers are relatively more likely to suffer a job loss in the latter part of
this period. Additionally, job loss became more common in some important
service industries and relatively less common in manufacturing during the
latter part of the ten-year period studied.
Supplementing the DWS data with data from the outgoing rotation groups
of the Current Population Survey from 1982-1991, I find that displaced workers
are, relative to non-displaced workers, 1) less likely to be employed and 2)
more likely to be employed part-time conditional on being employed. These
effects seem to decline with time since displacement. There is no systematic
secular change in these costs of displacement, either in the aggregate or for
particular groups. Finally, I examine the earnings losses of full-time
re—employed displaced workers by comparing their earnings change with the
earnings change of full-time employed workers who were not displaced. I find,
consistent with what others have found, that these earnings losses are
substantial.
Overall, the costs to displaced workers of job loss are substantial and
come in several forms. However, the public perception that the current
sluggish economy is worse than earlier downturns may reflect more who has lost
jobs recently rather than either increased overall job loss or increased costs
to those who are losing Jobs.

Year of Publication
1993
Number
309
Date Published
01/1993
Publication Language
eng
Citation Key
Brookings Papers on Economic Activity: Microeconomics, 1993.
Farber, H. (1993). The Incidence and Costs of Job Loss: 1982-1991. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01tb09j5655 (Original work published 01/1993AD)
Working Papers
Author
Abstract

I examine changes in the incidence and consequences of job loss between 1981 and
1999 using data from the DisplacedWorkers Surveys (DWS) from 1984-2000. The
overall rate of job loss has a strong counter-cyclical component, but the job loss
rate was higher than might have been expected during the mid-1990's given the
strong labor market during that period. While the job loss rate of more-educated
workers increased, less-educated workers continue to have the highest rates of job
loss overall. Displaced workers have a substantially reduced probability of em-
ployment and an increased probability of part-time employment subsequent to
job loss. The more educated have higher post-displacement employment rates
and are more likely to be employed full-time. The probabilities of employment
and full-time employment among those reemployed subsequent to job loss in-
creased substantially in the late 1990s, suggesting that the strong labor market
has eased the transition of displaced workers. Those re-employed, even full-time
and regardless of education level, suffer significant earnings declines relative to
what they earned before they were displaced. The earnings decline increases
dramatically with tenure on the lost job. Additionally, foregone earnings growth
(the growth in earnings that would have occurred had the workers not been dis-
placed), is an important part of the cost of job loss for re-employed full-time job
losers. There is no evidence of a decline during the tight labor market of the
last seven years in the earnings loss of displaced workers who are reemployed
full-time.

Year of Publication
2001
Number
453
Date Published
06/2001
Publication Language
eng
Citation Key
7906
Farber, H. (2001). Job Loss in the United States, 1981-1999. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01kh04dp694 (Original work published 06/2001AD)
Working Papers
Author
Abstract

I examine changes in the incidence and consequences of job loss by reported
cause between 1981 and 1995 using data from the Displaced Workers Surveys (DWS) from
1984-1996. The overall rate of job loss has increased in the 1990’s despite the sustained
expansion. The increase in job loss is larger for more educated workers, but less-educated
workers continue to have the highest rates of job loss overall. The rate of job loss due to
plant closings has been fairly constant over time while the rate of job loss due to “slack
work” , an important category primarily for less-educated workers, moves counter-cyclically
and has decreased somewhat in recent years. The most substantial changes are increases in
the last several years in the rates of job loss for more-educated workers due to “position or
shift abolished” and for all workers due to “other” (unspecified) reasons. I also examine the
consequences of displacement for several post-displacement labor market outcomes. These
include a substantially lowered probability of employment and an increased probability
of part-time employment. The more educated have higher post-displacement employment
rates, are more likely to be employed full-time. Those re-employed, even full-time and
regardless of education level, suffer significant earnings losses relative to what they would
have earned had they not been displaced. This wage loss has primarily taken the form
of a decline in earnings for the less educated, while more educated workers have suffered
a smaller earnings decline but have lost the significant earnings growth that accrues to
otherwise-equivalent non-displaced workers. Job loss due to position/ shift abolished, a
growing category for more educated workers, has particularly severe negative consequences
for earnings and may be related to corporate downsizing and restructuring. The source
and meaning of the large increase in job loss for “other” reasons remains a mystery.

Year of Publication
1997
Number
382
Date Published
06/1997
Publication Language
eng
Citation Key
Brookings Papers on Economic Activity: Microeconomics, 1997.
Farber, H. (1997). The Changing Face of Job Loss in the United States, 1981-1995. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01br86b358x (Original work published 06/1997AD)
Working Papers
Author
Abstract

I examine changes in the incidence of job loss between 1981 and 1995 using
data from the Displaced Workers Surveys (DWS) from 1984-1996. The rate of job loss
followed a cyclical pattern between 1981 and 1991, starting at a high level in the slack
labor market of the early 1980’s, falling during the economic expansion of the middle and
late 1980’s, and rising during the weak labor market at the end of the 1980’s and early
1990’s. A puzzle is that the overall rate of job loss has increased in the 1990’s despite the
sustained expansion. I document these facts and address the possibility that the elevated
rates of job loss in the 1990’s are a statistical artifact resulting from changes in the wording
of key questions in the DWS in 1994 and 1996 exacerbating a problem of misclassification
of some workers as displaced. Using additional data from a debriefing of respondents to the
the February 1996 DWS to adjust rates of job loss to estimate a consistent time series of
job loss rates, I find 1) that the overall rate of job loss has not declined in the 1993-95 time
period, despite the strong labor market and 2) the overall rate of job loss in the 1993-95
period may be as high as it was during the slack labor market of 1989-91 and almost as
high as it was during the very slack labor market of 1981-83.

Year of Publication
1998
Number
394
Date Published
01/1998
Publication Language
eng
Citation Key
IRRA 50th Annual Proceedings
Farber, H. (1998). Has the Rate of Job Loss Increased in the Nineties?. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01707957654 (Original work published 01/1998AD)
Working Papers
Author
Abstract

I examine changes in the incidence and consequences of job loss by reported
cause between 1981 and 1993 using data from Displaced Workers Surveys (DWS), con-
ducted as part of the Current Population Survey (CPS) in even years since 1984. The
overall rate of job loss is up somewhat in the 1990’s. The increase in job loss is larger
for older and more educated workers, but younger and less-educated workers continue to
have the highest rates of job loss. The rate of job loss due to plant closings has been fairly
constant over time while the rate of job loss due to ” slack work” moves counter-cyclically.
The most substantial changes are increases in the last several years in rates of job loss
due to ”position or shift abolished” and for other (unspecified) reasons. These changes in
composition are larger among more educated workers. Next I examine the consequences of
displacement for several post-displacement labor market outcomes, including the probabil-
ity of employment, full-time/part-time status, earnings, job stability, and self-employment
status. The consequences of job loss, which have always been substantial, do not appear
to have changed systematically over time. More educated workers suffer less economic loss
relative to income due to displacement than do the less educated. The more educated
have higher post-displacement employment rates, are more likely to be employed full-time,
have more stable employment histories, and suffer smaller proportional earnings losses on
average. Self-employment appears to be an important response to displacement, and older
workers and the more educated are more likely to turn to self-employment. Workers dis-
placed due to slack work are substantially less likely to be reemployed, and, among those
reemployed, are more likely to be working part-time relative to workers displaced for other
reasons.

Year of Publication
1996
Number
360
Date Published
03/1996
Publication Language
eng
Citation Key
8280
Farber, H. (1996). The Changing Face of Job Loss in the United States, 1981-1993. Retrieved from http://arks.princeton.edu/ark:/88435/dsp018623hx74x (Original work published 03/1996AD)
Working Papers