The Changing Face of Job Loss in the United States, 1981-1995


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.

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Brookings Papers on Economic Activity: Microeconomics, 1997.
Working Papers