The Impact of Job Displacement on Earnings Losses (in Japanese)

Kazuma Sato

Economic Analysis, 2015, vol. 188, 3-20

Abstract: The purpose of this paper is to examine the impact of job displacement on earnings losses by using the Keio Household Panel Survey (KHPS). During the long-term recession known as the “Lost Decade,” many Japanese workers experienced involuntarily unemployment. Although many studies have attempted to estimate the extent and persistence of earnings losses due to job displacement, there are only a few such studies focusing on Japan. When compared with other industrialized countries, the Japanese job change market is small and lifetime employment is still prevalent. Therefore, the earnings losses of displaced workers are generally considered to be large. However, the actual magnitude of these losses has not been clarified. We will examine the impact of job displacement on earnings losses by sex and age using the propensity score matching method. Three key points emerge from this analysis. First, after examining the results of an analysis by sex at all age groups, we find that earnings losses are larger among men than women. However, the earnings losses ratio is larger among women than men for most age groups. Second, an analysis of men of all age groups finds that the earnings of displaced workers are lower than those of continuous workers from the year of displacement to 3 years afterward. These earnings losses total over ¥600,000 at 3 years after the time of displacement. The cost of this displacement is greater for those in the middle and older age groups. This is caused by the decrease in the employment rate after displacement and the loss of human capital. Third, the analysis of women of all age groups also shows that the earnings of displaced workers are lower than those of continuous workers from the year of displacement to 3 years afterward. Here, earnings losses amount to over ¥300,000 at 3 years after the time of displacement. For workers under the age of 40 years, earnings losses persist for at least 1 year after the time of displacement. For workers over the age of 41 years, earnings losses persist for 3 years after the time of displacement. JEL Classification Number：J31,J63,J64 Key Word：Job Displacement、Earnings Losses、Propensity Score Matching Method

Date: 2015
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