Effects of Firm Size and Business Cycle on Earning Losses of Displaced Workers

Oliver Ruf

No 366, IEW - Working Papers from Institute for Empirical Research in Economics - University of Zurich

Abstract: This paper analyzes labor market success of workers who are displaced in boom versus recession periods. Moreover, the empirical analysis contrasts workers from small firms and large firms. The idea is that displacement carries no information about workers' productivity in large firms but is a signal of low productivity in small firms. This signal is stronger when the plant closure occurs in a boom period than in a recession period. Results indicate that the (i) state of the business cycle is important for influence the effect of displacement on labor market success and (ii) the effect differs by the size of the firm. In large firms, displaced workers suffer from larger earning losses when displacement occurs in recession compared to boom, the opposite result is found for workers displaced from small firms.

Keywords: Displaced workers; wage losses; business cycle; size of the firm (search for similar items in EconPapers)
JEL-codes: E32 J64 J65 (search for similar items in EconPapers)
Date: 2008-04
New Economics Papers: this item is included in nep-bec, nep-lab and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:zur:iewwpx:366

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