Working Paper: NBER ID: w24217
Authors: Marta Lachowska; Alexandre Mas; Stephen A. Woodbury
Abstract: We estimate the magnitudes of reduced earnings, work hours, and wage rates of workers displaced during the Great Recession using linked employer-employee panel data from Washington State. Displaced workers’ earnings losses occurred mainly because hourly wage rates dropped at the time of displacement and recovered sluggishly. Lost employer-specific premiums explain only 17 percent of these losses. Fully 70 percent of displaced workers moved to employers paying the same or higher wage premiums than the displacing employers, but these workers nevertheless suffered substantial wage rate losses. Loss of valuable specific worker-employer matches explain more than half of the wage losses.
Keywords: Displacement; Earnings Losses; Wage Rates; Worker Matches
JEL Codes: J0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| displacement (J63) | long-term earnings losses (J17) |
| displacement (J63) | reductions in hourly wage rates (J38) |
| displacement (J63) | reduced work hours (J22) |
| employer-specific effects (J79) | average earnings loss (J17) |
| match-specific factors (C52) | wage losses (J31) |
| direct displacement effects (J65) | wage losses (J31) |