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.
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Displaced 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.
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Comparing Measures of Earnings Instability Based on Survey and Adminstrative Reports
August 2010
Working Paper Number:
CES-10-15
In Celik, Juhn, McCue, and Thompson (2009), we found that estimated levels of earnings instability based on data from the Current Population Survey (CPS) and the Survey of Income and Program Participation (SIPP) were reasonably close to each other and to others' estimates from the Panel Study of Income Dynamics (PSID), but estimates from unemployment insurance (UI) earnings were much larger. Given that the UI data are from administrative records which are often posited to be more accurate than survey reports, this raises concerns that measures based on survey data understate true earnings instability. To address this, we use links between survey samples from the SIPP and UI earnings records in the LEHD database to identify sources of differences in work history and earnings information. Substantial work has been done comparing earnings levels from administrative records to those collected in the SIPP and CPS, but our understanding of earnings instability would benefit from further examination of differences across sources in the properties of changes in earnings. We first compare characteristics of the overall and matched samples to address issues of selection in the matching process. We then compare earnings levels and jobs in the SIPP and LEHD data to identify differences between them. Finally we begin to examine how such differences affect estimates of earnings instability. Our preliminary findings suggest that differences in earnings changes for those in the lower tail of the earnings distribution account for much of the difference in instability estimates.
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Abandoning 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.
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The Sensitivity of Economic Statistics to Coding Errors in Personal Identifiers
October 2002
Working Paper Number:
tp-2002-17
In this paper, we describe the sensitivity of small-cell flow statistics
to coding errors in the identity of the underlying entities. Specifically,
we present results based on a comparison of the U.S. Census Bureau's
Quarterly Workforce Indicators (QWI) before and after correcting for
such errors in SSN-based identifiers in the underlying individual wage
records. The correction used involves a novel application of existing
statistical matching techniques. It is found that even a very conservative
correction procedure has a sizable impact on the statistics. The
average bias ranges from 0.25 percent up to 15 percent for flow statistics,
and up to 5 percent for payroll aggregates.
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Revisiting the Effects of Unemployment Insurance Extensions on Unemployment: A Measurement Error-Corrected Regression Discontinuity Approach
March 2016
Working Paper Number:
carra-2016-01
The extension of Unemployment Insurance (UI) benefits was a key policy response to the Great Recession. However, these benefit extensions may have had detrimental labor market effects. While evidence on the individual labor supply response indicates small effects on unemployment, recent work by Hagedorn et al. (2015) uses a county border pair identification strategy to find that the total effects inclusive of effects on labor demand are substantially larger. By focusing on variation within border county pairs, this identification strategy requires counties in the pairs to be similar in terms of unobservable factors. We explore this assumption using an alternative regression discontinuity approach that controls for changes in unobservables by distance to the border. To do so, we must account for measurement error induced by using county-level aggregates. These new results provide no evidence of a large change in unemployment induced by differences in UI generosity across state boundaries. Further analysis suggests that individuals respond to UI benefit differences across boundaries by targeting job search in high-benefit states, thereby raising concerns of treatment spillovers in this setting. Taken together, these two results suggest that the effect of UI benefit extensions on unemployment remains an open question.
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Using linked employer-employee data to investigate the speed of adjustments in downsizing firms
May 2006
Working Paper Number:
tp-2006-03
When firms are faced with a demand shock, adjustment can take many forms. Firms can adjust
physical capital, human capital, or both. The speed of adjustment may differ as well: costs of
adjustment, the type of shock, the legal and economic enviroment all matter. In this paper, we
focus on firms that downsized between 1992 and 1997, but ultimately survive, and investigate how
the human capital distribution within a firm influences the speed of adjustment, ceteris paribus. In
other words, when do firms use mass layoffs instead of attrition to adjust the level of employment.
We combine worker-level wage records and measures of human capital with firm-level characteristics
of the production function, and use levels and changes in these variables to characterize
the choice of adjustment method and speed. Firms are described/compared up to 9 years prior to
death. We also consider how workers fare after leaving downsizing firms, and analyze if observed
differences in post-separation outcomes of workers provide clues to the choice of adjustment speed.
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Estimating the Relationship between Employer-Provided Health Insurance, Worker Mobility, and Wages
September 2002
Working Paper Number:
tp-2002-23
In this paper, a joint model of wages, hazard of a job ending, and
probability of holding employer-provided health insurance is estimated,
taking account of unobservable person and job characteristics. A unique
data source, the 1990 and 1996 SIPP Panels linked to SSA administrative
job histories, enables the identification of random person and job effects
and the correlation of these effects across the three equations. The explicit
modeling of this correlation produces consistent estimates of the
effect of tenure on wages and the effect of health insurance on mobility.
Substantial levels of job-lock and significant annual returns to seniority
are found. Increasing the job-specific probability of obtaining employerprovided
health insurance from 60% to 63%, or increasing the job-specific
hourly wage rate by $.80, are both associated with an equivalent decrease
in the hazard of the job ending. However, the dollar value of the wage
benefit is substantially higher.
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Earnings Growth, Job Flows and Churn
April 2020
Working Paper Number:
CES-20-15
How much do workers making job-to-job transitions benefit from moving away from a shrinking and towards a growing firm? We show that earnings growth in the transition increases with net employment growth at the destination firm and, to a lesser extent, decreases if the origin firm is shrinking. So, we sum the effect of leaving a shrinking and entering a growing firm and remove the excess turnover-related hires because gross hiring has a much smaller association with earnings growth than net employment growth. We find that job-to-job transitions with the cross-firm job flow have 23% more earnings growth than average.
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Can Displaced Labor Be Retrained? Evidence from Quasi-Random Assignment to Trade Adjustment Assistance
February 2022
Working Paper Number:
CES-22-05
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.
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The 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.
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