Assessing the Impact of Job Loss On Workers and Firms

Summary

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According to the US Bureau of Labor Statistics, between Jan 2001 and Dec 2003, 5.3 million workers were displaced from jobs that they had held for three or more years. In recent years, rates of job displacement have been relatively high. It is important to understand what types of individuals are likely to suffer most or least in the event that they are displaced. The effects of job loss may be different for workers with different characteristics. The general discussion at "Job Loss: Causes, Consequences, and Policy Responses," a conference which was cosponsored by the Federal Reserve Bank of Chicago and the Joyce Foundation, highlighted the diversity of points of view in the audience. Many economists agree that changes like technological progress and increased competition bring benefits for the majority, and that those benefits are greater than the costs. Participants agreed that in the US a great deal rests on having a job. Thus, job loss may have effects beyond labor market outcomes.

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Assessing the Impact of Job Loss On Workers and Firms

According to the U.S. Bureau of Labor Statistics, between January 2001 and December 2003, 5.3 million workers were displaced from jobs that they had held for three or more years. These workers are of particular interest for at least four reasons. First, they may have lost their jobs through no fault of their own. Second, their long association with their employers implies that they were good employees. Third, research has demonstrated that they are unlikely to get new jobs that are similar to their old jobs-particularly if they lost their old jobs because of technological change or international trade. Fourth, research has also shown that, on average, these workers are likely to suffer long-term earnings losses due to their job loss. These losses are larger in cases where workers had built up skills specifi...

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