Displaced Workers in Mass Layoffs: Pre-Displacement Earnings Losses and the Unions Effect

Abstract

In the first part of the paper, I compare the pre-displacement earnings of workers displaced from distressed firms to the wages of non-displaced workers. The results suggest that displaced workers suffer losses that amount to ll% of their earnings before the actual separation occurs. The second part of the paper concerns union effects on wages in situations of long-run declining demand. The findings suggest that for females unions "harvest" the quasi-rents of declining firms by rising the union-nonunion wage gap.