The long-run cost of job loss as measured by consumption changes |
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Authors: | Martin Browning Thomas F Crossley |
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Institution: | aUniversity of Oxford, United Kingdom;bIFS, United Kingdom;cUniversity of Cambridge, United Kingdom;dMcMaster University, Canada |
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Abstract: | We consider the measurement of the cost of job displacement. With a Canadian panel survey we compare the consumption growth of households that experienced a permanent layoff to a control group of households that experienced a temporary layoff with known recall date. Because the firms employing the latter group are providing insurance, these workers approximate a benchmark of full insurance against job loss shocks. We estimate that permanent layoffs experience an average consumption loss of between 4% and 10%. Older workers and workers with high job tenure have losses closer to the top of this range. |
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Keywords: | Job displacement Consumption |
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