Working Paper: NBER ID: w24077
Authors: Aaron B. Flaaen; Matthew D. Shapiro; Isaac Sorkin
Abstract: Prior literature has established that displaced workers suffer persistent earnings losses by following workers in administrative data after mass layoffs. This literature assumes that these are involuntary separations owing to economic distress. This paper examines this assumption by matching survey data on worker-supplied reasons for separations with administrative data. Workers exhibit substantially different earnings dynamics in mass layoffs depending on the rea- son for separation. Using a new methodology to account for the increased separation rates across all survey responses during a mass layoff, the paper finds earnings loss estimates that are surprisingly close to those using only administrative data.
Keywords: Worker Displacement; Earnings Losses; Mass Layoffs; Survey Data; Administrative Data
JEL Codes: J0; J26; J63; J65
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| firm contraction (J41) | worker separations (J63) |
| firm contraction (J41) | earnings losses (J17) |
| type of separation (C00) | earnings outcomes (J31) |
| misalignment between survey and administrative data (C83) | bias in estimating earnings losses (J17) |