2022/03/31 by Christopher Huckfeldt · 16 citations
Economics, Econometrics and Finance · Psychology · #Demographic economics #Displaced workers #Displacement (psychology) #Earnings #Economics #Finance #Firm Innovation and Growth #Forcing (mathematics) #Italy: Economic History and Contemporary Issues #Job loss #Keynesian economics #Labor market dynamics and wage inequality #Labour economics #Macroeconomics #Psychology #Recession #Unemployment
paper · doi:10.1257/aer.20160449
published in American Economic Review 112(4), 1273-1310 (American Economic Association)
openalex publication_date 2022/03/31 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/15
This paper documents that the earnings cost of job loss is concentrated among workers who find reemployment in lower-skill occupations, and that the cost and incidence of such occupation displacement is higher for workers who lose their job during a recession. I propose a model where hiring is endogenously more selective during recessions, leading some unemployed workers to optimally search for reemployment in lower-skill jobs. The model accounts for existing estimates of the size and cyclicality of the present value cost of job loss, and the cost of entering the labor market during a recession. (JEL E24, E32, J23, J24, J31, J63, J64)