Volume 28, Number 3 (Summer) 1993
Carrington, William J. 1993. "Wage Losses for Displaced Workers: Is it Really the Firm that Matters?" Journal of Human Resources 28(3):435-462.
Many studies have shown that displaced workers experience substantial wage reductions that are strongly related to their predisplacement job tenure and experience. This paper is an assessment of whether firm closures or downturns in more broadly defined labor markets drive the extreme wage losses of high tenure, high experience displaced workers. I show that relatively high wage losses of high experience displaced workers are primarily due to their heightened sensitivity to downturns in their state, industry, and occupation. However, the large wage losses of high tenure displaced workers are not explained by their sensitivity to these local downturns. One interpretation of these facts is that firm specialization is linked primarily to firm-specific experience, but not to general labor market experience.
William J. Carrington is an assistant professor at the Johns Hopkins University. The author is grateful for advice from Daniel Hamermesh, Bruce Hamilton, Lori Kletzer, Kristin McCue, Stephen Trejo, Kenneth Troske, and three anonymous referees. The data used in this article can be obtained beginning in December 1993 through December 1996 from the author at the following address: Department of Economics, The Johns Hopkins University, Baltimore, MD 21218.
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