Worker Adjustment to Economic Shocks
Saturday, Jan. 7, 2017 2:30 PM – 4:30 PM
Swissotel Chicago, Zurich E
- Chair: Steffen Mueller, Halle Institute for Economic Research
Adjusting to Globalization - Evidence From Worker-Establishment Matches in Germany
AbstractWe exploit rich worker-establishment data to trace the impact of rising international trade exposure in the job biographies of roughly 1.2 million manufacturing workers in Germany (1990-2010). Import penetration has substantial “push effects”: It reduces earnings, and induces workers to leave the exposed industries. The industry movers typically perform worse than comparable stayers who keep their initial jobs, but this is different for highly able workers who benefit from mobility ex post. Export opportunities, by contrast, have only little “pull effects”. Earnings gains arise within job spells, or through intra-industry reallocations, but there is little evidence for sorting into those industries.
The Costs of Job Displacement Over the Business Cycle and Its Sources: Evidence from Germany
AbstractWe document the costs of job loss to displaced workers over the business cycle and its sources using administrative data from Germany. Losses in annual earnings in Germany after displacement are large, persistent, and highly cyclical, nearly doubling in size during economic downturns. We show that part of these losses and their cyclicality is driven by unemployment. As a result, unemployment insurance (UI) plays an important role in buffering the effect of job displacements, especially in recessions. However, the longer-tem earnings losses we find are mainly driven by declines in wages, and hence UI benefits do little to offset life-time losses in earnings. Our findings results suggest that an important factor behind the long-lasting declines in wages and the cyclicality of wage losses at job displacement are changes in employer characteristics. Workers switch to smaller paying firms after job displacement, in particular in recessions.
University of Zurich
U.S. Census Bureau
Halle Institute for Economic Research
- F6 - Economic Impacts of Globalization
- J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers