American Economic Review: Vol. 100 No. 1 (March 2010)


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Earnings Losses of Displaced Workers Revisited

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Couch, Kenneth A., and Dana W. Placzek. 2010. "Earnings Losses of Displaced Workers Revisited." American Economic Review, 100(1): 572-89.

DOI: 10.1257/aer.100.1.572


Earnings losses of Connecticut workers affected by mass layoff are calculated using administrative data. Estimated reductions are initially more than 30 percent and six years later, as much as 15 percent. The Connecticut estimates are smaller than comparable ones from Pennsylvania administrative data but similar to those from the Panel Study of Income Dynamics (PSID) and Department of Workforce Services (DWS). Earnings reductions in Connecticut and Pennsylvania are concentrated among Unemployment Insurance recipients. An unusually high proportion of Unemployment Insurance beneficiaries in Pennsylvania explains the larger estimated losses relative to other studies. Fixed-effects, random growth, and matching estimators produced similar earnings loss estimates suggesting each is relatively unbiased in this context. (J31, J 63, J65, R23)

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Couch, Kenneth A. (U CT)
Placzek, Dana W. (State of CT Department of Labor)

JEL Classifications

J31: Wage Level and Structure; Wage Differentials
J63: Labor Turnover; Vacancies; Layoffs
J65: Unemployment Insurance; Severance Pay; Plant Closings
R23: Urban, Rural, and Regional Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics

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