Back to work: re-employment, earnings and skill use after job displacement

This report summarises the results of a cross-country study of job displacement over the past decade, covering Australia, Canada, Denmark, Finland, France, Germany, Japan, Korea, New Zealand, Portugal, the Russian Federation, Sweden, the United Kingdom and the United States. It attempts to fill some of the gaps in the existing literature by using a comparable methodology to examine job displacement and its consequences in these countries. Job displacement, that is involuntary job loss due to economic factors such as economic downturns or structural change, is highly cyclical but has not...  [+] Show more

This report summarises the results of a cross-country study of job displacement over the past decade, covering Australia, Canada, Denmark, Finland, France, Germany, Japan, Korea, New Zealand, Portugal, the Russian Federation, Sweden, the United Kingdom and the United States. It attempts to fill some of the gaps in the existing literature by using a comparable methodology to examine job displacement and its consequences in these countries. Job displacement, that is involuntary job loss due to economic factors such as economic downturns or structural change, is highly cyclical but has not exhibited any upwards trend over the past decade. Differences in available data sources and definitions make cross-country comparisons difficult, but it appears that displacement affects around 2-7 per cent of employees every year in the countries for which data are available. The report is organised as follows. Section one discusses the definitions and data sources used in the report, as well as their limitations. Section two presents estimates of the incidence of job displacement as well as identifies the types of workers most likely to be affected. Section three discusses the re-employment prospects of displaced workers. Section four examines the impact of job displacement on earnings, hours and working arrangements. Section five presents a detailed examination of skill-use by displaced workers before and after displacement, and the links between skills and post-displacement wage losses. The implications of the findings for policy makers are discussed in the conclusions of the report.

Findings include: some workers have a greater risk of job displacement and are more likely to experience poor post-displacement outcomes than others; in most of the countries examined, older workers and those with low education levels have a higher displacement risk, take longer to get back into work and suffer greater (and more persistent) earnings losses; while youth also have a higher risk of displacement than prime-aged workers, they fare better afterwards; young workers generally find work relatively quickly after displacement, often in jobs with greater skill requirements than their previous jobs; women are generally no more likely to be displaced than men, once other factors such as the type of contract they hold before displacement are taken into account, however, women are more likely than men to become disconnected from the labour market and experience longer spells of inactivity after displacement; the extent of earnings losses after displacement varies substantially across countries; as well as lower earnings, re-employed displaced workers are more likely to work in part-time or non-permanent jobs than prior to displacement, and work shorter hours on average; and changes in skill use after displacement explain some, but not all, of the earnings losses experienced by displaced workers.

Edited excerpts from publication.