NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Long-Term Effects of Job Displacement: Evidence from the Panel Study of Income Dynamics

Ann Huff Stevens

NBER Working Paper No. 5343
Issued in November 1995
NBER Program(s):   LS

This paper measures the long-term wage and earnings losses of workers who lose jobs due to plant closings and layoffs, using a fixed-effects estimator to control for unobserved worker characteristics and longitudinal data from the Panel Study of Income Dynamics. The results show large and persistent effects of displacement on average, with earnings and wages falling by 25 and 12 percent in the year after job loss. Six or more years later, earnings and wages remain reduced by approximately nine percent. Multiple job losses are responsible for much of this persistence. Those workers who avoid subsequent displacements experience more rapid recovery, with earnings and wage reductions of one and four percent six or more years after displacement. These multiple job losses are not heavily concentrated among any identifiable group of workers, but instead affect the recovery patterns of workers with a variety of characteristics.

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Document Object Identifier (DOI): 10.3386/w5343

Published: "Persistent Effects of Job Displacement: The Importance of Multiple Job Losses," Journal of Labor Economics (January 1997).

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