Kristiina Huttunen (University of Helsinki), Jarle Møen, Kjell G. Salvanes

How Destructive is Creative Destruction? Investigating Long-term Effects of Worker Displacement

How long-lasting are the consequences of job loss for displaced workers? This paper addresses this question using matched employeremployee panel data from Norway for 1986-2000. We investigate the long-term impact of job displacement on future employment patterns and earnings. The focus is on workers who have been displaced by plant closing or been separated from downsizing plants. The results imply that job displacement have long-lasting negative e.ects on workers’ future earnings and employment. Contrary to expectations, workers who stay in the plant until the closing down su.er less severe consequences of displacement than the ones who separated from them before. The e.ects of job loss are stronger for workers with longer pre-displacement job tenure, and for workers who are separated from bigger plants.

Keywords: Job displacement, Employment, Wages

JEL Codes: J63, J64, J65

Session: 6d   Room 2003   Category: Labour market dynamics 3

Paper