Labor Market Conditions and the Reemployment of Displaced Workers

The authors of this study use data from the January 1984 Current Population Survey to examine the impact of local labor market conditions on the financial losses of displaced manufacturing workers. They find that strong overall growth in the local economy reduced the economic losses of white-collar workers whose industry of displacement was declining, but not of blue-collar workers in the same situation. Most older, poorly educated blue-collar workers with long tenure at their pre-layoff job suffered large financial losses even when displaced in a growing local economy. All workers, including those who were young and well-educated, suffered large financial losses when located in a depressed local economy.