Sources of Displaced Workers' Long-Term Earnings Losses

Lachowska, Marta; Mas, Alexandre; Woodbury, Stephen A.

doi:10.17848/wp18-282

Cited by 44 publications

(112 citation statements)

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“…13 Other work using the Washington data are Jardim et al (2017) who analyze the consequences of minimum wage increases in Seattle, WA; Lachowska et al (2017) who study the role of hours variations for earnings losses after mass layoff events; and Lachowska et al (2018) who test the quality of the hours data and conclude, as we do, that this quality is high. time, their analysis is much more limited in scope.…”

Section: Introductionmentioning

confidence: 56%

Downward Nominal Wage Rigidity in the United States: New Evidence From Worker-Firm Linked Data

Kurmann

McEntarfer

2018

SSRN Journal

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This paper examines the extent and consequences of Downward Nominal Wage Rigidity (DNWR) using administrative worker-firm linked data from the Longitudinal Employer Household Dynamics (LEHD) program for a large representative U.S. state. Prior to the Great Recession, only 7-8% of job stayers are paid the same nominal hourly wage rate as one year earlier -substantially less than previously found in survey-based data -and about 20% of job stayers experience a wage cut. During the Great Recession, the incidence of wage cuts increases to 30%, followed by a large rise in the proportion of wage freezes to 16% as the economy recovers. Total earnings of job stayers exhibit even fewer zero changes and a larger incidence of reductions than hourly wage rates, due to systematic variations in hours worked. The results are consistent with concurrent findings in the literature that reductions in base pay are exceedingly rare but that firms use different forms of nonbase pay and variations in hours worked to flexibilize labor cost. We then exploit the worker-firm link of the LEHD and find that during the Great Recession, firms with indicators of DNWR reduced employment by about 1.2% more per year. This negative effect is driven by significant ly lower hiring rates and persists into the recovery. Our results suggest that despite the relatively large incidence of wage cuts in the aggregate, DNWR has sizable allocative consequences. for their insightful comments and discussions; and many seminar and conference participants for their comments. The views expressed in this paper do not necessarily represent the views of the U.S. Census Bureau. All results have been reviewed to ensure that no con dential information is disclosed. Output was released under DRB bypass numbers DRB-0096B-CDAR-06252018 and DRB-B0106-CDAR-20180716. Contact information: kurmann.andre@drexel.edu and erika.mcentarfer@census.gov. Recession shock. See for example Chodorow-Reich (2014) and Giroud and Mueller (2017) on financial frictions; Alfaro and Chen (2012) on ownership; or Aghion et al. (2017) on decentralization.9 See Section 3 for a discussion of this literature. 10 These calculations do not take into account that job movers, which are not distinguished from job stayers in New Keynesian models, have considerably more flexible wages than job stayers.

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Section: Introductionmentioning

confidence: 56%

Downward Nominal Wage Rigidity in the United States: New Evidence From Worker-Firm Linked Data

Kurmann

McEntarfer

2018

SSRN Journal

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“…Crossley, Jones, and Kuhn () find that wage loss after job displacement is smaller when the plant is located in a more populated area. Finally, a sizable share of the wage losses associated with job displacement can be explained by workers being employed by lower paying firms postdisplacement (Lachowska, Mas, & Woodbury, ).…”

Section: Background and Literature Reviewmentioning

confidence: 99%

Determinants of postdisplacement reemployment outcomes and occupation changes

Kosteas

2019

Journal of Regional Science

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We investigate the roles played by agglomeration (proxied by population density) and occupational distribution on postdisplacement employment outcomes for US workers, focusing on the probability of being employed, the likelihood of changing occupations, and the occupational distance between the old and new occupations (where occupational distance is defined as the difference in job tasks between two occupations). Overall, we find that the local occupational distribution has a greater impact on our outcome variables compared with our agglomeration measure. Our findings suggest policy makers should look closely at occupational distribution when designing job training programs and proposals for relocation vouchers.

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“…As compared with recent studies that use the JLS-type identification strategy (e.g Lachowska, Mas and. Woodbury 2018, Powell andSeabury 2018), we are unable to use workers within the same firm to construct the control group, because sales increases affect all workers at a given firm.…”

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confidence: 99%

No Pain, No Gain: Work Demand, Work Effort, and Worker Health

Hummels¹,

Munch²,

Xiang³

2016

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Increased job effort can raise productivity and income but put workers at increased risk of illness and injury. We combine Danish data on individuals' health with Danish matched worker-firm data to understand how rising exports affect individual workers' effort, injury, and illness. We find that when firm exports rise for exogenous reasons: 1. Workers work longer hours and take fewer sick-leave days; 2. Workers have higher rates of injury, both overall and correcting for hours worked; and 3. Women have higher sickness rates. For example, a 10% exogenous increase in exports increases women's rates of injury by 6.4%, and hospitalizations due to heart attacks or strokes by 15%. Finally, we develop a novel framework to calculate the marginal disutility of any non-fatal disease, such as heart attacks, and to aggregate across multiple types of sickness conditions and injury to compute the total utility loss. While the ex-ante utility loss for the average worker is small relative to the wage gain from rising exports, the ex-post utility loss is much larger for those who actually get injured or sick. David IntroductionIncreased job effort by workers may raise productivity and income both for those workers and the firms who employ them. But increased effort may come with a potential downside: putting in longer hours or working more intensively may endanger health. 1Sorting out the linkages between effort, productivity and health can be difficult. Healthier workers may be capable of working harder or longer hours, or conversely, "type A" individuals may desire to work harder and suffer health consequences, not as a result of work, but as a result of a comprehensively intensive approach to life. Working more intensively may also raise income and many studies show that higher income or wealth leads to better health (e.g. Marmot et al. 1991, Smith 1999, and Sullivan and von Wachter 2009. In contrast, Ruhm (2000)'s finding that the U.S. mortality rate is pro-cyclical suggests a competing channel: rising labor demand may lead to increased effort and so higher health risks. While the intellectual heritage of this effort channel can be traced back to Rosen (1986), its identification has remained elusive. Stevens, Miller, Page and Filipski (2015), for example, argue that Ruhm (2000)'s result for mortality is driven by staffing changes at nursing homes. 2In this paper we provide tight identification for the effort channel. Our matched worker-firm data allows us to look at changes in worker-level effort, injury and illness within job-spells, and changes in exporting activity provides a source of exogenous shocks to labor demand within the firm.We find that this increase in labor demand can be met by inducing workers to expand hours and increase work intensity, a potentially important adjustment mechanism that has been largely overlooked in the literature on globalization and labor markets (e.g. Verhoogen 2008, Autor, Dorn and Hanson 2013, and Hummels, Jørgensen, Munch and Xiang 2014, or HJMX 2014 3 . Taking this a step lin...

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Sources of Displaced Workers' Long-Term Earnings Losses

Cited by 44 publications

References 12 publications

Downward Nominal Wage Rigidity in the United States: New Evidence From Worker-Firm Linked Data

Downward Nominal Wage Rigidity in the United States: New Evidence From Worker-Firm Linked Data

Determinants of postdisplacement reemployment outcomes and occupation changes

No Pain, No Gain: Work Demand, Work Effort, and Worker Health

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