Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/202880 
Year of Publication: 
2017
Series/Report no.: 
Upjohn Institute Working Paper No. 18-282
Publisher: 
W.E. Upjohn Institute for Employment Research, Kalamazoo, MI
Abstract: 
We estimate the earnings losses of a cohort of workers displaced during the Great Recession and decompose those long-term losses into components attributable to fewer work hours and to reduced hourly wage rates. We also examine the extent to which the reduced earnings, work hours, and wages of these displaced workers can be attributed to factors specific to pre- and post-displacement employers; that is, to employer-specific fixed effects. The analysis is based on employer-employee linked panel data from Washington State assembled from 2002-2014 administrative wage and unemployment insurance (UI) records. Three main findings emerge from the empirical work. First, five years after job loss, the earnings of these displaced workers were 16 percent less than those of comparison groups of non-displaced workers. Second, earnings losses within a year of displacement can be explained almost entirely by lost work hours; however, five years after displacement, the relative earnings deficit of displaced workers can be attributed roughly 40 percent to reduced hourly wages and 60 percent to reduce work hours. Third for the average displaced worker, lost employer-specific premiums account for about 11 percent of long-term earnings losses and nearly 25 percent of lower long-term hourly wages. For workers displaced from employers paying top-quintile earnings premiums (about 60 percent of the displaced workers in the sample), lost employer-specific premiums account for more than half of long-term earnings losses and 83 percent of lower long-term hourly wages.
Subjects: 
Earnings
hours
wages
displaced workers
unemployment
reemployment policy
administrative data
difference-in-differences
employer- vs. individual-specific earnings and wage differentials
JEL: 
C21
J22
J23
J38
J65
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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