Board of Governors of the Federal Reserve System

September 2012

Job-to-Job Flows and the Consequences of Job Separations

Bruce Fallick, John Haltiwanger, and Erika McEntarfer

Abstract:

This paper extends the literature on the earnings losses of displaced workers to provide a more comprehensive picture of the earnings and employment outcomes for workers who separate. First, we compare workers who separate from distressed employers (presumably displaced workers) and those who separate from stable or growing employers. Second, we distinguish between workers who do and do not experience a spell of joblessness. Third, we examine the full distribution of earnings outcomes from separations - not the impact on only the average worker. We find that earnings outcomes depend much less on whether a job separation is associated with a distressed employer than on whether the separator experienced a jobless spell after the separation. Moreover, we find that workers separating from distressed firms are faster to find jobs at new employers than are other separators.

Keywords: Displaced workers, job separations, job-to-job flows, nonemployment

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