The Long-Run Cost of Job Loss as Measured by Consumption Changes

Martin Browning and Thomas Crossley

Quantitative Studies in Economics and Population Research Reports from McMaster University

Abstract: The costs of involutary job loss are of substantial research and policy interest. We consider the measurement of the cost of job displacement with household expenditure data. With a Canadian panel survey of individuals who experienced a job separation, we compare the consumption growth of households that experienced a permanent layoff to a control group of households that experienced a temporary layoff with known recall date. Because the firms employing the latter group are providing insurance, these workers approximate a bench mark of full insurance against job loss shocks. We estimate that permanent layoffs experience an average consumption loss of between 4 and 10 percent. Older workers and workers with high job tenure have losses closer to the top of this range.

Keywords: Job Displacement; Consumption (search for similar items in EconPapers)
JEL-codes: D91 J63 J65 (search for similar items in EconPapers)
Date: 2006-06
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Related works:
Working Paper: The Long Run Costs of Job Loss as Measured by Consumption Changes (2000)
Working Paper: The Long-Run Cost of Job Loss as Measured by Consumption Changes (2006)
Journal Article: The long-run cost of job loss as measured by consumption changes (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:mcm:qseprr:405

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