The Incidence and Costs of Job Loss: 1982-1991

Abstract

I focus on two aspects of Job loss. First, I examine evidence on the incidence of job loss by worker and job characteristics including age, education, race, sex, industry, and tenure over the period from 1982 to 1991. Second, I examine the cost of job loss to workers in the form of 1) lower post-displacement employment probabilities, 2) lower probabilities of full-time employment for re—employed workers, and 3) lower earnings for full-time workers. Using data from Displaced Workers Surveys (DWS) from 1984 through 1992 to study job loss from 1982-91, I find that older workers and more educated workers are relatively more likely to suffer a job loss in the latter part of this period. Additionally, job loss became more common in some important service industries and relatively less common in manufacturing during the latter part of the ten-year period studied. Supplementing the DWS data with data from the outgoing rotation groups of the Current Population Survey from 1982-1991, I find that displaced workers are, relative to non-displaced workers, 1) less likely to be employed and 2) more likely to be employed part-time conditional on being employed. These effects seem to decline with time since displacement. There is no systematic secular change in these costs of displacement, either in the aggregate or for particular groups. Finally, I examine the earnings losses of full-time re—employed displaced workers by comparing their earnings change with the earnings change of full-time employed workers who were not displaced. I find, consistent with what others have found, that these earnings losses are substantial. Overall, the costs to displaced workers of job loss are substantial and come in several forms. However, the public perception that the current sluggish economy is worse than earlier downturns may reflect more who has lost jobs recently rather than either increased overall job loss or increased costs to those who are losing Jobs.