Heterogeneity among Displaced Workers

We combine post-displacement survey data with information from a displacing firm's personnel files in order to reveal sources of worker heterogeneity in search time and wage losses. First, we detail how experience-related characteristics affect workers' labour market careers during a period of three years after the bankruptcy of the firm. We find that wage losses are large. Interestingly, firm, rank, or job tenure do not explain observed wage differences. Idiosyncratic ability, job rotations prior to displacement, and differences in pre- and post-displacement job characteristics contribute most to observed variations in wages. The individual post-displacement labor market histories allow for testing the Blanchard-Diamond (1994) ranking model for which we find no support. We then develop a dynamic reservation wage updating model. The method of updating is based on the simple idea that job seekers are informed about successful matches of their former colleagues (Rees, 1966; Granovetter, 1974). The model fits the data well.idiosyncratic ability, mass lay-off, social networks, unemployment

Workforce Reorganization and the Worker

In this paper we study the joint decision process of changing the structure of jobs and laying off individual workers in a firm that downsizes its workforce. A hierarchical decision model is proposed and estimated using personnel data from a firm in demise comparing the characteristics of the individual workers and the structure of the firm's labour force before and after its reorganization. Our results show that workers in jobs in the top levels of each skill group's hierarchy are better protected against downsizing due to larger productivity shocks and larger firing costs.hierarchies, restructuring, control span, job displacement

Markets for Reputation: Evidence on Quality and Quantity in Academe

We develop a theory of the market for individual reputation, an indicator of regard by one’s peers and others. The central questions are: 1) Does the quantity of exposures raise reputation independent of their quality? and 2) Assuming that overall quality matters for reputation, does the quality of an individual’s most important exposure have an extra effect on reputation? Using evidence for academic economists, we find that, conditional on its impact, the quantity of output has no or even a negative effect on each of a number of proxies for reputation, and very little evidence that a scholar's most influential work provides any extra enhancement of reputation. Quality ranking matters more than absolute quality. Data on mobility and salaries show, on the contrary, substantial positive effects of quantity, independent of quality. We test various explanations for the differences between the determinants of reputation and salary.mobility, quality/quantity trade-off, salary determination

Two-Sided Learning, Labor Turnover and Displacement

We construct a general dynamic structural model of two-sided learning between a firm and its workers. We estimate an empirical version of the model using personnel data from Fokker Aircraft that cover the path of layoffs and quits through its bankruptcy. We find that the firm learns about its workers' loyalty (demonstrating the role of information in repeated cooperative principal-agent relationships). There is no evidence that workers learn (consistent with earlier empirical results on American workers). The type of data that we use also generates information on the value of learning and on whether and how the characteristics of workers who remain until the firm's death differ from those of all affected workers. It thus allows us to measure the increases in the firm's value from learning about its workers' behavior and to infer the extent of biases in estimated losses from displacement from samples restricted to displaced workers.

Asymmetric and time-varying error-correction: an application to labour demand in the UK

In this paper we compare the asymmetric and time-varying error-correction models that have recently been proposed, and apply these to the case of UK aggregate labour demand. The aim of the paper is to investigate the possible co-existence of time-varying adjustment on the one hand, and constant asymmetric error-correction on the other hand. We find that without allowing for time-varying adjustment variables, the asymmetric error-correction models of Granger and Lee (1989) and Escribano (1986) work well. But once the time-varying adjustment variables are included, the evidence for time-invariant asymmetric adjustment is marginal