Using generalized random forests and rich Swedish administrative data, we
show that the earnings effects of job displacement due to establishment
closures are extremely heterogeneous across workers, establishments, and
markets. The decile of workers with the largest predicted effects lose 50
percent of annual earnings the year after displacement and accumulated losses
amount to 250 percent during a decade. In contrast, workers in the least
affected decile experience only marginal losses of less than 6 percent in the
year after displacement. Workers in the most affected decile tend to be lower
paid workers on negative earnings trajectories. This implies that the economic
value of (lost) jobs is greatest for workers with low earnings. The reason is
that many of these workers fail to find new employment after displacement.
Overall, the effects are heterogeneous both within and across establishments
and combinations of important individual characteristics such as age and
schooling. Adverse market conditions matter the most for already vulnerable
workers. The most effective way to target workers with large effects, without
using a complex model, is by focusing on older workers in routine-task
intensive job