The Incidence and Costs of Job Loss: 1982-1991


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
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
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Brookings Papers on Economic Activity: Microeconomics, 1993.
Working Papers