The Costs of Involuntary Job Loss: Impacts on Workers’ Employment and Earnings

Sylvia Dixon (sylvia.dixon@dol.govt.nz) and David Maré
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Sylvia Dixon: Labour Group, Ministry of Business, Innovation and Employment

No 13_03, Working Papers from Motu Economic and Public Policy Research

Abstract: This paper examines the incidence of involuntary job loss and its impact on the employment and earnings of affected workers, using data from the Survey of Families, Incomes and Employment (SoFIE) for the 2002–09 period. It focusses on employees who had been working in their job for at least one year before the job loss. The impact of displacement on employment and earnings was estimated by using a propensity score-matching approach to select similar non-displaced workers and then compare their outcomes. We find that the employment rate of displaced workers was on average 27 percentage points lower 0–1 years after displacement, 14 percentage points lower 1–2 years after, and 8 percentage points lower 2–3 years after, than that of the matched comparison group. The average wage of re-employed displaced workers was 12 percent lower 0–1 years after displacement, 11 percent lower 1–2 years after and 7 percent lower 2–3 years after. Other impacts included increases in unemployment and self-employment, reductions in average weekly hours, and reductions in weekly and annual earnings.

Keywords: Displaced workers; redundancy; SoFIE; propensity matching (search for similar items in EconPapers)
JEL-codes: J63 J64 J65 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2013-04
New Economics Papers: this item is included in nep-lab and nep-lma
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Persistent link: https://EconPapers.repec.org/RePEc:mtu:wpaper:13_03

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