Assessing the Impact of Job Loss on Workers and Firms

According to the U.S. Bureau of Labor Statistics, between January 2001 and December 2003, 5.3 million workers were displaced from jobs that they had held for three or more years. These workers are of particular interest for at least four reasons. First, they may have lost their jobs through no fault of their own. Second, their long association with their employers implies that they were good employees. Third, research has demonstrated that they are unlikely to get new jobs that are similar to their old jobs—particularly if they lost their old jobs because of technological change or international trade. Fourth, research has also shown that, on average, these workers are likely to suffer long-term earnings losses due to their job loss. These losses are larger in cases where workers had built up skills specific to a particular job and where they are unlikely to be reemployed in a similar job.