Volume 30, Number 3 (Summer) 1995
de la Rica, Sara. 1995. "Evidence of Preseparation Earnings Losses in the Displaced Worker Survey." Journal of Human Resources 30(3):610-621.
This paper attempts to quantify preseparation earnings losses of workers displaced in mass layoffs using the Displaced Worker Survey, the largest and most representative sample of displaced workers. Using the 1986 Displaced Worker Survey and random samples of the 1984 and 1985 Current Population Survey as a comparison group, it is found that workers lose on average 9 percent of their earnings prior to separation as a result of wage cuts. This result is very similar to the preseparation losses found in other studies using different data sources. One implication of this finding is that those studies that only take into consideration the post-displacement losses of workers displaced in mass layoffs clearly underestimate the total costs suffered by these workers.
The author is an associate professor at the University del País Vasco.
He is especially grateful to David Card, Thomas Lemieux, and an anonymous referee for their valuable comments, and in general, to all members of the Industrial Relations Section of Princeton University. He also appreciates help from Kainan Tang. Financial support from the Spanish Ministry of Education and Science is gratefully acknowledged.
The data used in this article can be obtained from the author: Depto de Fundamentos del Análisis Económico, Facultad de CC.EE, Avenida Lehendarkari Aguirre 83, 48015 Bilbao (Spain).
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