Job Destruction and the Experiences of Displaced Workers / Wouter J. den Haan, Garey Ramey, Joel Watson.

Format:

Book

Author/Creator:

den Haan, Wouter J.

Contributor:

National Bureau of Economic Research.

Ramey, Garey.

Watson, Joel.

Series:

Working Paper Series (National Bureau of Economic Research) no. w7218.

NBER working paper series no. w7218

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1999.

Summary:

This paper evaluates a class of endogenous job destruction models based on how well they explain the observed experiences of displaced workers. We show that pure reallocation models in which relationship-specific productivity drifts downward over time are difficult to reconcile with the evidence on postdisplacement wages and displacement rates. Pure reallocation models with upward drift can explain the evidence, but implausibly large and persistent negative productivity shocks are required to generate displacements. Combining upward drift with outside benefits or moral hazard as additional motives for displacement makes it possible to explain the evidence with much smaller shocks. Propagation of aggregate shocks, welfare implications of displacement, upgrade of relationships in lieu of displacement, and learning effects are also discussed.

Notes:

Print version record

July 1999.