Losses to Workers Displaced by Plant Closure or Layoff: A Survey of the Literature,
Abstract
Workers who are displaced when a plant closes, or when there is a permanent layoff resulting from reduced demand, usually suffer losses in earnings. These losses are due to unemployment and to wage reductions which reflect more permanent impairment of earnings capacity. It is important to know the long terms effects of job displacement. Many prospective changes in government policy can result in reductions in demand for specific products and lead to some job displacement. This paper reviews seventeen recent studies of the effects of job loss on earnings. They range from case studies of specific plant closures to more broadly based studies of the effects of job loss, in which control groups are used to estimate losses in earnings over a number of years after layoff. Methods of analysis range from simple tabulations to estimation of income determination models based on human capital theory. The losses documented in these studies can be taken to illustrate the magnitude of losses that would result from displacements due to increased import penetration. Some of the studies deal with job losses specifically due to increased import competition, but all are concerned with job losses following declines in demand for domestic production. Whatever the cause of a fall in demand for the products of an industry, increased import penetration, changes in tastes, etc., the skills of workers that are specifically adapted to either the industry or to particular firms within that industry become less valuable.
Document Details
- Document Type
- Technical Report
- Publication Date
- Nov 01, 1976
- Accession Number
- ADA096137
Entities
People
- Arlene Holen