Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/67324
Authors: 
Jung, Philip
Kuhn, Nikolas Moritz
Year of Publication: 
2012
Series/Report no.: 
Discussion Paper Series, Forschungsinstitut zur Zukunft der Arbeit 6835
Abstract: 
Extensive literature demonstrates that workers with high tenure suffer large and persistent earnings losses when they are displaced. We study the reasons behind these losses in a tractable search model that includes a lifecycle dimension, endogenous job mobility, and worker- and match-heterogeneity. The model jointly explains key characteristics of the U.S. labor market such as large average transition rates, a large share of stable jobs, and earnings losses after displacement. We decompose earnings losses and find that only 50% result from wage loss, and endogenous reactions and selection account for the remainder. These findings have important implications for welfare costs of displacement and labor market policies.
Subjects: 
earnings losses
lifecycle
labor-market transitions
turbulence
JEL: 
E24
J63
J64
Document Type: 
Working Paper

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