Job Displacement and Earnings Losses: The Role of Joblessness

2025/03/28 by Bruce Fallick, John Haltiwanger, Erika McEntarfer +1 · 1 voice
Economics, Econometrics and Finance · Health Professions · Social Sciences · #Employment and Welfare Studies #Labor market dynamics and wage inequality #Retirement, Disability, and Employment

paper · doi:10.1257/mac.20210329

openalex publication_date 2025/03/28 · openalex created_date 2025/10/10 · openalex updated_date 2026/06/11

Abstract

A large literature finds that workers displaced in mass layoffs experience persistent earnings losses. We find that the earnings penalty from job displacement is mediated by the length of the jobless spell after displacement. Workers who experience little or no joblessness suffer no losses on average; those who experience a prolonged period of joblessness experience large, persistent earnings losses. Job movers who experience joblessness tend to move to lower-paying firms, a phenomenon that informs our understanding of the mechanisms that generate earnings losses. We also find that jobless duration predicts earnings outcomes for separators generally, not only displaced workers. (JEL E24, J24, J31, J62, J63, J64)

Citations

• Earnings Losses of Displaced Workers Revisited
• Sources of Displaced Workers’ Long-Term Earnings Losses
• The Sources of the Wage Losses of Displaced Workers
• The Costs of Job Displacement over the Business Cycle and Its Sources: Evidence from Germany

Discussions

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Related

• The Sources of the Wage Losses of Displaced Workers
• The Firm’s Role in Displaced Workers’ Earnings Losses
• The Costs of Job Displacement over the Business Cycle and Its Sources: Evidence from Germany
• Sources of Displaced Workers’ Long-Term Earnings Losses
• The Heterogeneous Earnings Impact of Job Loss Across Workers, Establishments, and Markets