Job Displacement and Sectoral Mobility Job Displacement and Sectoral Mobility

Job displacement typically leads to sizable and persistent earnings losses for long-tenured workers. These earnings losses are generally larger for displaced workers who change industries once reemployed. Nevertheless, displaced workers may still benefit from different-industry employment. The new sector may be a preferred alternative to nonemployment with zero earnings, may offer better long-run prospects for positive earnings, or may have desirable traits not related to earnings, such as improved benefits or job stability. Given such implications of post-displacement sectoral mobility, and since this mobility is not random, it is important to understand the determinants of these industry changes following job loss. This paper examines the relationship between job displacement and sectoral mobility for long-tenured workers in the United States over the 1996–2019 period. Using two features of the US Current Population Survey—the cross-sectional Displaced Worker Survey and the 16-month longitudinal framework of the Basic Monthly Survey—the author first establishes descriptive patterns of industry switching following job loss and then estimates the causal impact of job displacement on sectoral mobility.

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