Pedro Portugal (Banco de Portugal and Universidade NOVA de Lisboa), Anabela Carneiro

Earnings Losses of Displaced Workers: Evidence From a Matched Employer-Employee Dataset

This paper examines the long-term earnings losses of displaced workers in Portugal, using a nationally representative longitudinal linked employeremployee data set. The results show that four years after displacement the earnings of displaced workers remain around 8% (women) to 11% (men) below their counterfactual expected levels. The post-displacement earnings losses are mainly associated with the loss of tenure within the firm and, to a lesser extent, to the loss of sector-specific features. Furthermore, workers who experienced a spell of nonemployment are the most a.ected by job displacement.

Finally, this study points to the importance of controlling for employers’ characteristics in this type of wages-dynamic analysis, since there are systematic di.erences in earnings between displaced and non-displaced workers that stem from di.erences in firm characteristics. Ignoring them may confound the evaluation of the earnings losses.

Keywords: displacement; earnings losses; nonemployment; firm characteristics

JEL Codes: J31; J63; J65

Session: 2d   Room 2003   Category: Job separation

Paper