Job Destruction and the Experiences of Displaced Workers

Wouter J. den Haan, Garey Ramey and Joel Watson ()
Authors registered in the RePEc Author Service: Wouter Denhaan ()

No 7218, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper evaluates a class of endogenous job destruction models based on how well they explain the observed experiences of displaced workers. We show that pure reallocation models in which relationship-specific productivity drifts downward over time are difficult to reconcile with the evidence on postdisplacement wages and displacement rates. Pure reallocation models with upward drift can explain the evidence, but implausibly large and persistent negative productivity shocks are required to generate displacements. Combining upward drift with outside benefits or moral hazard as additional motives for displacement makes it possible to explain the evidence with much smaller shocks. Propagation of aggregate shocks, welfare implications of displacement, upgrade of relationships in lieu of displacement, and learning effects are also discussed.

JEL-codes: J31 J64 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab, nep-ltv and nep-pke
Date: 1999-07
Note: EFG
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Related works:
Working Paper: Job Destruction and the Experiences of Displaced Workers (1999)
Working Paper: Job Destruction and the Experiences of Displaced Workers (1999)
Journal Article: Job destruction and the experiences of displaced workers (2000)
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