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The Costs of Job Displacement over the Business Cycle and Its Sources: Evidence from Germany

Johannes Schmieder, Till von Wachter and Jörg Heining

No 30162, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We document the sources behind the costs of job loss over the business cycle using administrative data from Germany. Losses in annual earnings after displacement are large, persistent, and highly cyclical, nearly doubling in size during downturns. A large part of the long-term earnings losses and their cyclicality is driven by declines in wages. Key to these long-lasting wage declines and their cyclicality are changes in employer characteristics, as displaced workers switch to lower-paying firms. Changes in characteristics of workers or displacing firms explain little of the cyclicality, though non-employment durations correlated with losses in employer effects play a role.

JEL-codes: J0 J2 J31 J60 J63 J64 J65 (search for similar items in EconPapers)
Date: 2022-06
New Economics Papers: this item is included in nep-bec and nep-lab
Note: LS
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Citations: View citations in EconPapers (33)

Published as Johannes F. Schmieder & Till von Wachter & Jörg Heining, 2023. "The Costs of Job Displacement over the Business Cycle and Its Sources: Evidence from Germany," American Economic Review, vol 113(5), pages 1208-1254.

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Journal Article: The Costs of Job Displacement over the Business Cycle and Its Sources: Evidence from Germany (2023) Downloads
Working Paper: The Costs of Job Displacement over the Business Cycle and Its Sources: Evidence from Germany (2022) Downloads
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