Understanding the Reallocation of Displaced Workers to Firms

Abstract

We study job displacement in France. In the medium run, losses in firm-specific wage premium account for a substantial share of tthe overall cost of displacement. However, and despite the positive correlation between premium and productivity in the cross-section of firms, we find that workers are reemployed by high productivity, low labor share firms. The observed reallocation is therefore productivity-enhancing, yet costly for workers. We show that destination firms are less likely to conclude collective wage agreements and have lower participation rates at professional elections. Overall, our results point to a loss in bargaining power

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