Resource title

Labor turnover before plant closure: leaving the sinking ship vs. captain throwing ballast overboard

Resource image

image for OpenScout resource :: Labor turnover before plant closure: leaving the sinking ship vs. captain throwing ballast overboard

Resource description

Involuntary job loss in administrative data is commonly identified by focusing on mass-layoffs or plant closures. However, such events usually do not happen without prior knowledge, which potentially leads to selection in the labor turnover of distressed firms. We find that workers separating from closing plants up to 2 quarters before closure are associated with significantly lower displacement costs and on average significantly higher pre-closure earnings levels as opposed to ultimately displaced workers. Furthermore, our results indicate that displaced workers with high pre-closure earnings experience significantly lower reductions in future employment probabilities. These findings suggest that compositional differences cause estimated displacement costs to differ between early leavers and ultimately displaced workers. Focusing exclusively on the latter group would lead to a serious overestimation of displacement costs.

Resource author

Guido Schwerdt

Resource publisher

Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/26297

Resource license

Adapt according to the presented license agreement and reference the original author.