| Abstract: |
This paper investigates the effects of displacement on outcomes such as annual
earnings, unemployment, wages and hours worked. It relies on previously
unexplored administrative data on all displaced workers in Sweden in 2002,
2003 and 2004 which are linked to employer-employee matched data at the
individual level. By linking the data to military enlistment records, the
paper assesses the selection into displacement and finds that workers with low
cognitive and noncognitive skills are significantly more likely to be
displaced than high-skilled workers. The analysis of displacement effects
shows evidence of large and long-lasting welfare costs from displacement.
Moreover, studying the heterogenous impacts of job displacement in terms of
cognitive and noncognitive skills reveals that although workers with high
skills fare better than low-skilled workers in absolute terms, there are no
significant differences in the recovery rates between skill groups. Finally,
by using administrative data on displacements, it is possible to assess
quantitatively the bias that results from not being able to separate quits
from layoffs in earlier studies |