Association for Public Policy Analysis & Management

This paper provides an analysis of the experiences of workers who are displaced from their jobs and their families across different countries.  The paper also examines the responses of different governments to job displacement in order to better illuminate possible policy options to this common problem.  Job Displacement refers to the loss of employment due to circumstances beyond the control of an individual worker such as international trade competition.  In a typical year, roughly 5 percent of workers lose a job due to job displacement in the United States.  In the Great Recession, more than 15 percent of all U.S. workers lost their jobs.  The analysis makes use of panel data methods for estimating treatment effects developed in the prior literature along with harmonized data from the Cross-Nation Equivalent File (CNEF) across countries. 

 The initial focus of the analysis is to examine the incidence of job displacement as well as the extent of earnings losses experienced in different societies as a result of job displacement.  Prior analyses which have not made use of consistently developed measures from multiple countries suggest that the portion of wages lost due to job displacement are similar but they have been conducted on one country at a time.  We are unaware of any study that compares the incidence of job displacement across countries.  Here, we will make comparisons across multiple countries.  This will allow us to more directly examine if workers face a fairly common individual risk both of displacement and resulting wage losses.

 After examining earnings losses for individuals, we will then examine the extent to which households self-insure against the event of job displacement in different societies by increasing labor market activity of other household members.  We will also examine the impact of job displacement on total household income as well as post-government household income to see how responses across countries help stabilize living standards of households in response to commonly occurring dynamics in a market economy.  As part of this analysis, we will examine the policy levers used in different countries to support households that contain a displaced worker.

Thus far, we have completed the analysis for Britain using the British Household Panel Survey (BHPS) and for Germany using the German Socio-Economic Panel (GSOEP).  We expect to add estimates for Switzerland and Korea prior to the conference and are working on those estimates now.