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ACI Avances en Ciencias e Ingenierías

SECTION C: ENGINEERING

Vol. 14 No. 1 (2022)

Labor displacement effects over inter-temporal earnings mobility

DOI
https://doi.org/10.18272/aci.v14i1.2294
Submitted
May 15, 2021
Published
2022-04-11

Abstract

I study how involuntary job loss affects workers' inter-temporal labor earnings mobility. I use Panel Study Income Dynamics (PSID) 1973-2017 survey waves to construct transition probability matrices and compute ordered logistic regression estimates. I find that being displaced increases downward mobility compared to never displaced workers. The reduction of hours worked, large spells of unemployment and the destruction of firm-specific human capital depreciate the market value of a displaced worker generating significant labor income losses.

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