How unemployable are displaced manufacturing workers?: An analysis of adjustment costs and supplemental adjustment assistance benefits in France

There are government programs which provide supplemental adjustment assistance benefits to displaced workers in designated industries. Appealing to the ‘gains from trade’ with income redistribution theory, this paper analyzes the link between the adjustment costs of displaced workers and their former sector of employment. These costs are measured by French data on the mean duration of joblessness of laid-off workers. Empirical evidence is found which confirms the hypothesis that workers displaced from traditional manufacturing and resource industries suffer particularly high losses stemming from unemployment. These effects may be tied to workings of internal labour markets.