Panel Paper: The Employees' New Employment Dynamics When A Business Closes

Saturday, November 10, 2012 : 2:25 PM
Salon B (Radisson Plaza Lord Baltimore Hotel)

*Names in bold indicate Presenter

Ting Zhang and David Stevens, University of Baltimore

In this paper we describe and contrast what happened after employees involuntarily lost their jobs because Maryland businesses permanently closed before the recession (1st quarter of 2004—3rd quarter of 2007) and during the recession (4th quarter of 2007—2nd quarter of 2009). Four questions are answered here about impacts of the recent recession on employees that lost a job because of a business closure in Maryland:  (1) Were job losers during the recession less likely than their pre-recession counterparts to reappear as an employee of a Maryland business following the involuntary end of their former business affiliation? (2) For those who did reappear, did it take longer for those that lost a job during the recession to return to work than the time taken for their pre-recession counterparts to return to work?  (3) Were those that lost a job after the recession began, and then reappeared, more likely than their pre-recession counterparts to now be affiliated with an employer in a different industry?  (4)  What are the comparative pre-post earnings profiles for those losing their previous job because of a business closure during the recession or pre-recession time spans?

This report is based on two careful extraction of confidential administrative data sources covered by an Interagency Agreement between the Maryland Department of Labor, Licensing and Regulation and the University of Baltimore’s Jacob France Institute—an extract from the Quarterly Census of Employment and Wages file, and the State’s Unemployment Insurance Wage Record file. No disclosure of an individual business or employee is permitted. Descriptive statistics is used in the paper. The paper presents the detailed findings by the comparison of consequences of business closure during the recession and pre-recession years. The policy relevance of our findings is enhanced by this comparison.  The paper is aimed to learn practical lessons for future actions from what happened in Maryland during these different phases of the most recent business cycle.