Wage Insurance for Displaced Workers

Benjamin Hyman, Brian Kovak and Adam Leive ()
Additional contact information
Benjamin Hyman: https://www.newyorkfed.org/research/economists/hyman
Adam Leive: https://vcresearch.berkeley.edu/faculty/adam-leive

No 1105, Staff Reports from Federal Reserve Bank of New York

Abstract: Wage insurance provides income support to displaced workers who find reemployment at a lower wage. We analyze wage insurance in the context of the U.S. Trade Adjustment Assistance (TAA) program by merging linked employer-employee Census data to TAA petitions and leveraging a discontinuity in eligibility based on worker age. Wage insurance eligibility increases short-run employment probabilities and leads to higher long-run cumulative earnings. We find shorter non-employment durations largely drive increased long-term earnings among workers eligible for wage insurance. Our results are quantitatively consistent with a standard non-stationary partial equilibrium search model. The program is self-financing even under conservative assumptions.

Keywords: social insurance; displaced workers; regression discontinuity (search for similar items in EconPapers)
JEL-codes: J01 J6 J65 (search for similar items in EconPapers)
Pages: 99
Date: 2024-05-01
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (4)

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Working Paper: Wage Insurance for Displaced Workers (2024)
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DOI: 10.59576/sr.1105

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