Research

This paper studies the scarring effect of job displacement by explicitly considering workers who return to their previous employer. Using German administrative data I show that these ``recalled” workers face similar long-run earnings losses and slightly larger short-run losses compared to non-recalled workers. I develop a job search model that accounts for the heterogeneous effects by recall status. The estimated model shows that recalled workers’ larger short-run losses are explained by differences in nonemployment duration, whereas long-term losses are similar because recalled workers’ increased likelihood of repeated job loss is offset by reduced skills depreciation during the initial nonemployment spell.

(previously presented as: Heterogeneity in the Scarring Effects of Displacement, Recall and Heterogeneity in the Scarring Effects of Displacement)

In this paper, we study how the effect of displacement on subsequent earnings and employment differs by the worker's age. Using a life-cycle model, we investigate the extent to which the design of social security drives this variation. Using German social security data, we first establish that earnings losses generally increase in age. Employment losses increase in age until workers approach the retirement window. Our model features search frictions, human capital, savings, and a detailed representation of the German unemployment insurance, welfare, and pension systems. Using the estimated model, we find age-dependent job finding rates and the age-dependencies embedded in the social security system to be important in accounting for the age gradients in post-displacement earnings and employment losses. Furthermore, workers are able to effectively shield themselves against the welfare cost of displacement through unemployment insurance and savings. Finally, job loss heterogeneously nudges workers to change their retirement timing.

Workers who are displaced from their job experience a well-documented scarring effect: a large and persistent average earnings loss. However, these average effects mask a substantial amount of heterogeneity along a number of observable dimensions. In this paper, I explore how the scarring effect of job displacement differs by the affected workers' earnings prior to displacement. I use detailed administrative data from Germany to empirically analyze this dimension. I find that earnings losses, relative to pre-displacement earnings, are larger for individuals whose recent earnings situate them at the bottom of the earnings distribution. This seemingly contradicts existing models that can account for the average scarring effect, as these are generally based on the idea of a job ladder, and thus imply that workers at the top of the earnings distribution should suffer from  (relatively) larger earnings losses. I then propose a model in which displaced workers do not fall off the ladder completely if they find a new job shortly after being displaced. In that case, the size of their drop is determined by the characteristics of the firm they were laid off from. I show that this framework enables the model to explain the relatively larger earnings losses at the bottom of the earnings distribution.

(previously presented as: Heterogeneity in the Scarring Effects of Displacement)

This paper investigates the cyclicality of occupational mobility and its consequences for subsequent earnings and wages, distinguishing between workers who switch occupations through unemployment and workers who switch as part of a job-to-job transition. Using data from the Survey of Income and Program Participation, I find that the fraction of occupational switchers who switch through unemployment is countercyclical, and while these workers generally do worse in terms of earnings than workers who make a job-to-job transition, their earnings and wage patterns may slightly improve in recessions. I then propose a job search model of occupational mobility in which I incorporate both types of occupational switches and show that the overall deterioration of earnings and wage outcomes for occupational switchers in recessions is largely driven by a composition change towards switching through unemployment, dampened by the outcomes experienced by workers who switch occupations without switching employers.

(previously presented as Occupational Mobility over the Business Cycle)