Employment, Hours and Earnings Consequences of Job Loss: U.S. Evidence from the Displaced Workers Survey

Abstract

The Great Recession from December 2007 to June 2009 is associated with a dramatic weakening of the labor market from which it has recovered only slowly. I use data from the Displaced Workers Survey (DWS) from 1984-2016 to investigate the incidence and consequences of job loss from 1981-2015. In particular, the 2010-2016 DWSs provide a window through which to examine the experience of job losers in the Great Recession and its aftermath and to compare their experience to that of earlier job losers. These data show a record high rate of job loss in the Great Recession, with almost one in six workers reporting having lost a job in the 2007-2009 period, that slowly returned to pre-recession levels in the 2011-2015 period. The employment consequences of job loss are also very serious during this period with very low rates of reemployment and difficulty finding full-time employment during the Great Recession and its aftermath. The reduction in weekly earnings for those full-time job losers during the 2007-2015 period who were able to find new full-time employment are relatively small, even for those displaced since 2008. In fact, a substantial minority of these job losers report earning more on their new job than on the lost job. Most of the cost of job loss comes from difficulty in finding new full-time employment. [JEL Classification: J63]