Can Displaced Labor Be Retrained? Evidence from Quasi-Random Assignment to Trade Adjustment Assistance
February 2022
Working Paper Number:
CES-22-05
Abstract
The extent to which workers adjust to labor market disruptions in light of increasing pressure from trade and automation commands widespread concern. Yet little is known about efforts that deliberately target the adjustment process. This project studies 20 years of worker-level earnings and re-employment responses to Trade Adjustment Assistance (TAA)'a large social insurance program that couples retraining incentives with extended unemployment insurance (UI) for displaced workers. I estimate causal effects from the quasi-random assignment of TAA cases to investigators of varying approval leniencies. Using employer-employee matched Census data on 300,000 workers, I find TAA approved workers have $50,000 greater cumulative earnings ten years out'driven by both higher incomes and greater labor force participation. Yet annual returns fully depreciate over the same period. In the most disrupted regions, workers are more likely to switch industries and move to labor markets with better opportunities in response to TAA. Combined with evidence that sustained returns are delivered by training rather than UI transfers, the results imply a potentially important role for human capital in overcoming adjustment frictions.
Document Tags and Keywords
Keywords
Keywords are automatically generated using KeyBERT, a powerful and innovative
keyword extraction tool that utilizes BERT embeddings to ensure high-quality and contextually relevant
keywords.
By analyzing the content of working papers, KeyBERT identifies terms and phrases that capture the essence of the
text, highlighting the most significant topics and trends. This approach not only enhances searchability but
provides connections that go beyond potentially domain-specific author-defined keywords.
:
economist,
endogeneity,
earnings,
employ,
employed,
labor,
incentive,
workforce,
welfare,
relocation,
unemployment rates,
employment statistics,
unemployment insurance,
unemployed,
compensation,
employment trends,
advancement
Tags
Tags are automatically generated using a pretrained language model from spaCy, which excels at
several tasks, including entity tagging.
The model is able to label words and phrases by part-of-speech,
including "organizations." By filtering for frequent words and phrases labeled as "organizations", papers are
identified to contain references to specific institutions, datasets, and other organizations.
:
Internal Revenue Service,
Standard Industrial Classification,
Bureau of Labor Statistics,
Social Security Administration,
National Science Foundation,
Ordinary Least Squares,
2SLS,
North American Free Trade Agreement,
Decennial Census,
Employer Identification Numbers,
Department of Labor,
Council of Economic Advisers,
North American Industry Classification System,
American Community Survey,
Alfred P Sloan Foundation,
Longitudinal Employer Household Dynamics,
Business Register,
Individual Characteristics File,
UC Berkeley,
World Trade Organization,
Federal Government
Similar Working Papers
Similarity between working papers are determined by an unsupervised neural
network model
know as Doc2Vec.
Doc2Vec is a model that represents entire documents as fixed-length vectors, allowing for the
capture of semantic meaning in a way that relates to the context of words within the document. The model learns to
associate a unique vector with each document while simultaneously learning word vectors, enabling tasks such as
document classification, clustering, and similarity detection by preserving the order and structure of words. The
document vectors are compared using cosine similarity/distance to determine the most similar working papers.
Papers identified with 🔥 are in the top 20% of similarity.
The 10 most similar working papers to the working paper 'Can Displaced Labor Be Retrained? Evidence from Quasi-Random Assignment to Trade Adjustment Assistance' are listed below in order of similarity.
-
Working PaperUnemployment Insurance Extensions, Labor Market Concentration, and Match Quality🔥
April 2026
Working Paper Number:
CES-26-24
I investigate whether the effects of UI extensions are different for workers exposed to higher levels of local labor market concentration, a potential source of employer market power. I exploit measurement error in state unemployment rates that led to quasi-random assignment of UI durations in the U.S. during the Great Recession. Using matched employer-employee data from the Longitudinal Employer-Household Dynamics program, I find that UI extensions lengthen nonemployment durations by one week and cause economically meaningful but not statistically significant increases in earnings. The UI-earnings effect is significantly lower at higher levels of concentration, while there is no difference in the UI-duration effect. The lower UI-earnings effect is driven by the extremes of the distribution of concentration. My results suggest that match improvements from UI are attenuated at higher levels of concentration.View Full Paper PDF
-
Working PaperDisplaced workers, early leavers, and re-employment wages
November 2002
Working Paper Number:
tp-2002-18
In this paper, we lay out a search model that takes explicitly into account the information flow prior to a mass layoff. Using universal wage data files that allow us to identify individuals working with healthy and displacing firms both at the time of displacement as well as any other time period, we test the predictions of the model on re-employment wage differentials. Workers leaving a "distressed" firm have higher re-employment wages than workers who stay with the distressed firm until displacement. This result is robust to the inclusion of controls for worker quality and unobservable firm characteristics.View Full Paper PDF
-
Working PaperTrapped or Transferred: Worker Mobility and Labor Market Power in the Energy Transition
December 2025
Working Paper Number:
CES-25-76
Using matched employer-employee data covering 1.35 million US workers separated from the fossil fuel extraction industry between 1999 and 2019, I estimate how local fossil fuel labor demand shocks affect employment and earnings. Employment probabilities fall markedly after exposure, and earnings decline gradually over the first seven years with only partial recovery by ten years since exposure to the shocks. Workers who remain in the fossil fuel sector, disproportionately men in sector-specific roles, experience nearly twice the earnings losses of those who switch sectors, possibly due to limited occupational mobility. Among non-switchers, losses are larger in labor markets with high employer concentration, indicating that scarce outside options translate into lower reemployment wages and weaker bargaining positions. Geographic movers fare worse than stayers, reflecting negative selection (younger, lower-earning) and relocation to metropolitan areas where fossil fuel or low-skilled service sectors remain highly concentrated, leaving monopsony power intact.View Full Paper PDF
-
Working PaperDid Timing Matter? Life Cycle Differences in Effects of Exposure to the Great Recession
September 2019
Working Paper Number:
CES-19-25
Exposure to a recession can have persistent, negative consequences, but does the severity of those consequences depend on when in the life cycle a person is exposed? I estimate the effects of exposure to the Great Recession on employment and earnings outcomes for groups defined by year of birth over the ten years following the beginning of the recession. With the exception of the oldest workers, all groups experience reductions in earnings and employment due to local unemployment rate shocks during the recession. Younger workers experience the largest earnings losses in percent terms (up to 13 percent), in part because recession exposure makes them persistently less likely to work for high-paying employers even as their overall employment recovers more quickly than older workers'. Younger workers also experience reductions in earnings and employment due to changes in local labor market structure associated with the recession. These effects are substantially smaller in magnitude but more persistent than the effects of unemployment rate increases.View Full Paper PDF
-
Working PaperA Shock by Any Other Name? Reconsidering the Impacts of Local Demand Shocks
February 2026
Working Paper Number:
CES-26-10
Over the last decade, research on labor market adjustment following local demand shocks has expanded to explore a wide variety of measured shocks. However, the worker adjustments observed in response to these shocks are not always consistent across studies. We create a harmonized set of annual commuting-zone-level shocks following the major approaches in the literature to investigate these differences. As one might expect, shocks of different types exhibit different geographic and temporal patterns and are generally weakly correlated with each other. We find they also generate different employment and migration responses, with trade-related shocks showing little response on either margin, while more general Bartik-style shocks are associated with economically meaningful changes in both employment and migration.View Full Paper PDF
-
Working PaperEstimating the "True" Cost of Job Loss: Evidence Using Matched Data from Califormia 1991-2000
June 2009
Working Paper Number:
CES-09-14
Estimates of the cost of job displacement from survey and administrative data differ markedly. This paper uses a unique match of data between the Displaced Worker Survey (DWS) and administrative wage records from California to examine the sources of this discrepancy. When we use similar estimation methods and account for measurement error in survey wages correlated with worker demographics, estimates of earnings losses at displacement are similar from both datasets and significantly larger than those based on the DWS alone. Also correcting for measurement errors in reported displacements suggests both sources of such estimates may yield lower bounds for the true cost of displacement.View Full Paper PDF
-
Working PaperThe Work Disincentive Effects of the Disability Insurance Program in the 1990s
February 2006
Working Paper Number:
CES-06-05
In this paper we evaluate the work disincentive effects of the Disability Insurance program during the 1990s. To accomplish this we construct a new large data set with detailed information on DI application and award decisions and use two different econometric evaluation methods. First, we apply a comparison group approach proposed by John Bound to estimate an upper bound for the work disincentive effect of the current DI program. Second, we adopt a Regression-Discontinuity approach that exploits a particular feature of the DI eligibility determination process to provide a credible point estimate of the impact of the DI program on labor supply for an important subset of DI applicants. Our estimates indicate that during the 1990s the labor force participation rate of DI beneficiaries would have been at most 20 percentage points higher had none received benefits. In addition, we find even smaller labor supply responses for the subset of 'marginal' applicants whose disability determination is based on vocational factors.View Full Paper PDF
-
Working PaperThe Distributional Effects of Minimum Wages: Evidence from Linked Survey and Administrative Data
March 2018
Working Paper Number:
carra-2018-02
States and localities are increasingly experimenting with higher minimum wages in response to rising income inequality and stagnant economic mobility, but commonly used public datasets offer limited opportunities to evaluate the extent to which such changes affect earnings growth. We use administrative earnings data from the Social Security Administration linked to the Current Population Survey to overcome important limitations of public data and estimate effects of the minimum wage on growth incidence curves and income mobility profiles, providing insight into how cross-sectional effects of the minimum wage on earnings persist over time. Under both approaches, we find that raising the minimum wage increases earnings growth at the bottom of the distribution, and those effects persist and indeed grow in magnitude over several years. This finding is robust to a variety of specifications, including alternatives commonly used in the literature on employment effects of the minimum wage. Instrumental variables and subsample analyses indicate that geographic mobility likely contributes to the effects we identify. Extrapolating from our estimates suggests that a minimum wage increase comparable in magnitude to the increase experienced in Seattle between 2013 and 2016 would have blunted some, but not nearly all, of the worst income losses suffered at the bottom of the income distribution during the Great Recession.View Full Paper PDF
-
Working PaperContrasting the Local and National Demographic Incidence of Local Labor Demand Shocks
July 2024
Working Paper Number:
CES-24-36
This paper examines how spatial frictions that differ among heterogeneous workers and establishments shape the geographic and demographic incidence of alternative local labor demand shocks, with implications for the appropriate level of government at which to fund local economic initiatives. LEHD data featuring millions of job transitions facilitate estimation of a rich two-sided labor market assignment model. The model generates simulated forecasts of many alternative local demand shocks featuring different establishment compositions and local areas. Workers within 10 miles receive only 11.2% (6.6%) of nationwide welfare (employment) short-run gains, with at least 35.9% (62.0%) accruing to out-of-state workers, despite much larger per-worker impacts for the closest workers. Local incidence by demographic category is very sensitive to shock composition, but different shocks produce similar demographic incidence farther from the shock. Furthermore, the remaining heterogeneity in incidence at the state or national level can reverse patterns of heterogeneous demographic impacts at the local level. Overall, the results suggest that reduced-form approaches using distant locations as controls can produce accurate estimates of local shock impacts on local workers, but that the distribution of local impacts badly approximates shocks' statewide or national incidence.View Full Paper PDF
-
Working PaperAbandoning the Sinking Ship: The Composition of Worker Flows Prior to Displacement
August 2002
Working Paper Number:
tp-2002-11
declines experienced by workers several years before displacement occurs. Little attention, however, has been paid to other changes in compensation and employment in firms prior to the actual displacement event. This paper examines changes in the composition of job and worker flows before displacement, and compares the "quality" distribution of workers leaving distressed firms to that of all movers in general. More specifically, we exploit a unique dataset that contains observations on all workers over an extended period of time in a number of US states, combined with survey data, to decompose different jobflow statistics according to skill group and number of periods before displacement. Furthermore, we use quantile regression techniques to analyze changes in the skill profile of workers leaving distressed firms. Throughout the paper, our measure for worker skill is derived from person fixed effects estimated using the wage regression techniques pioneered by Abowd, Kramarz, and Margolis (1999) in conjunction with the standard specification for displaced worker studies (Jacobson, LaLonde, and Sullivan 1993). We find that there are significant changes to all measures of job and worker flows prior to displacement. In particular, churning rates increase for all skill groups, but retention rates drop for high-skilled workers. The quantile regressions reveal a right-shift in the distribution of worker quality at the time of displacement as compared to average firm exit flows. In the periods prior to displacement, the patterns are consistent with both discouraged high-skilled workers leaving the firm, and management actions to layoff low-skilled workers.View Full Paper PDF
