Lasting or Latent Scars? Swedish Evidence on the Long-Term Effects of Job Displacement

Marcus Eliason () and Donald Storrie
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Donald Storrie: European Foundation for the Improvement of Living and Working Conditions and CELMS, Department of Economics, Göteborg University

Journal of Labor Economics, 2006, vol. 24, issue 4, pages 831-856

Abstract: Recently improved Swedish register data have made it possible to remedy many weaknesses of previous research on displaced workers. Using linked employer-employee data, we identify all workers displaced in 1987, due to an establishment closure, and follow them over both a predisplacement period of 4 years and a postdisplacement period stretching until 1999. We find that the displaced workers suffer both earnings losses and worsened labor-market position not only during a transitory period of adjustment but also in the longer run. These longer-run effects seem to be driven by an increased sensitivity to subsequent macroeconomic shocks.

Date: 2006
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