Job loss and effects on firms and workers

Abstract

This paper serves as an introduction and (incomplete) survey of the wide-ranging literature on job loss. We begin with a discussion of job stability in the US and the commitment between firms and workers, and how this has changed in recent years. We then focus on the short and long-term consequences to workers (i.e. wages, health outcomes) following a layoff, and the effect which mass layoffs have on future firm performance. The changing nature of these relationships over the past several decades is a central theme of this paper. We review the common data sources used to examine these questions, and identify many influential papers on each topic. Additionally, we discuss alternative policies to the typical mass layoff, such as worksharing. We are grateful to David Autor, Sherrilyn Billger, Kristin Butcher, David Clark, Henry Farber, Felice Klein, Harold Oaklander, Tim Taylor and Olga Yakusheva for many helpful suggestions on work leading to this paper. Michelle Arthur, Sara Christopher, John Deke, Erica Field, Charles Fields, Clayton Reck, Martha Schniepp, and Kristen Stanton provided excellent research assistance in collecting some of the data. This paper draws on, among others, Hallock (2006) and Hallock (2009) for which permission has been granted from Emerald Group Publishing Limited and The American Economic Association, respectively to use portions in this work. 1 AbstractThis paper serves as an introduction and (incomplete) survey of the wide-ranging literature on job loss. We begin with a discussion of job stability in the US and the commitment between firms and workers, and how this has changed in recent years. We then focus on the short and long-term consequences to workers (i.e. wages, health outcomes) following a layoff, and the effect which mass layoffs have on future firm performance. The changing nature of these relationships over the past several decades is a central theme of this paper. We review the common data sources used to examine these questions, and identify many influential papers on each topic. Additionally, we discuss alternative policies to the typical mass layoff, such as worksharing. 2Job loss is painful. There are thousands of individual stories of workers who lose their jobs each year from all parts of the world 1 . A great deal of work across the social sciences examines the causes and consequences of job loss. This chapter considers a small part of that work and specifically focuses on the effects of job loss on workers (including the effects on subsequent wages and on health) and on the effects of job loss on companies (including short-and longer-run corporate performance). It also considers other questions such as whether firms are less committed to workers and workers less committed to firms than they were in the recent past, considers a variety of data sources for research on job loss, and considers alternatives to job loss and various public policies in the United States and throughout the world.To begin, it should be noted that this paper will not focus on other im...

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