The Firm’s Role in Displaced Workers’ Earnings Losses

2025/01/16 by Brendan Moore, Judith Scott-Clayton · 1 voice
Economics, Econometrics and Finance · #Labor market dynamics and wage inequality #Unemployment and Economic Growth #Indian Economic and Social Development

paper · doi:10.1177/00197939241310124

Abstract

The authors investigate the role of firm pay premiums in explaining the large, persistent earnings losses of displaced workers. They first estimate that long-run earnings for displaced workers from 2002 to 2008 in Ohio are depressed by 22%. Drawing upon empirical approaches from the displaced worker and firm heterogeneity literature, the authors then estimate that one-quarter of this earnings loss can be explained by the forfeiture of a favorable employer-specific pay premium. Such firm rents are more salient for those laid off from manufacturing firms, explaining half of their lost earnings. Nevertheless, this study adds to early evidence that firm rents do not explain the majority of earnings losses sustained by displaced workers in the United States.

Citations

• Earnings Losses of Displaced Workers Revisited
• Earnings Losses and Unemployment of Displaced Workers in Germany
• 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

• Do firm pay premiums explain earnings loss of displaced workers? Brendan D. Moore & Judith Scott-Clayton's study add to the early evidence that firm rents do not explain the majority of earnings losse [bsky, 0 points, 0 comments]

Related

• Sources of Displaced Workers’ Long-Term Earnings Losses
• The Sources of the Wage Losses of Displaced Workers
• Job Displacement and Earnings Losses: The Role of Joblessness
• Earnings Losses of Displaced Workers Revisited
• The Heterogeneous Earnings Impact of Job Loss Across Workers, Establishments, and Markets