Job ladders and earnings of displaced workers
P Krolikowski - American Economic Journal: Macroeconomics, 2017 - aeaweb.org
American Economic Journal: Macroeconomics, 2017•aeaweb.org
Workers who suffer job displacement experience surprisingly large and persistent earnings
losses. This paper proposes an explanation for this robust empirical puzzle in a model of
search with a significant job ladder and increased separation rates for the recently hired. In
addition to capturing the depth and persistence of displaced worker earnings losses, the
model matches: employment-to-nonemployment and employer-to-employer probabilities by
tenure; the empirical decomposition of earnings losses into reduced wages and …
losses. This paper proposes an explanation for this robust empirical puzzle in a model of
search with a significant job ladder and increased separation rates for the recently hired. In
addition to capturing the depth and persistence of displaced worker earnings losses, the
model matches: employment-to-nonemployment and employer-to-employer probabilities by
tenure; the empirical decomposition of earnings losses into reduced wages and …
Abstract
Workers who suffer job displacement experience surprisingly large and persistent earnings losses. This paper proposes an explanation for this robust empirical puzzle in a model of search with a significant job ladder and increased separation rates for the recently hired. In addition to capturing the depth and persistence of displaced worker earnings losses, the model matches: employment-to-nonemployment and employer-to-employer probabilities by tenure; the empirical decomposition of earnings losses into reduced wages and employment; observed wage dispersion; and the distribution of wage changes around a nonemployment event. (JEL J31, J63, J64)
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