The Echo of Job Displacement

Marcus Eliason () and Donald Storrie ()

William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: This paper examines whether the loss of a job increases the likelihood of future difficulties on the labour market. We study displacement resulting from all plant closures (with ten or more employees) in Sweden in 1987 and follow their labor market outcome up to 1999. The control group is extracted from a random sample of non-displaced employees by matching on propensity scores. We find a rapid and almost total initial recovery of those displaced in 1987 compared to the control group up to 1990, both with respect to employment and unemployment measures. However, with the advent of the deep recession in 1990, the two groups again diverge. There is some relative recovery in the mid to late 1990s. However, by the end of the 1990s, the echo of the job loss 13 years earlier had still not subsided. We attribute the long-term effects as being either due to recurrent loss of match-specific capital or statutory seniority lay-offs rules.

Keywords: Plant closure; displaced workers; unemployment scarring; linked employeremployee data; propensity score matching. (search for similar items in EconPapers)
JEL-codes: J63 J64 J65 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2003-10-01
New Economics Papers: this item is included in nep-lab and nep-ltv
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: The echo of job displacement (2004)
Working Paper: The Echo of Job Displacement (2004)
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