Premium
Search Costs and Re‐Employment Wage Gains for Displaced Workers
Author(s) -
D’ARCY LAURA P.,
STATER MARK,
WENGER JEFFREY B.
Publication year - 2009
Publication title -
industrial relations: a journal of economy and society
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.61
H-Index - 57
eISSN - 1468-232X
pISSN - 0019-8676
DOI - 10.1111/j.1468-232x.2009.00577.x
Subject(s) - displaced workers , labour economics , wage , economics , search cost , survey of income and program participation , job loss , unemployment , economic growth , microeconomics
Involuntary job separation generally leads to lower re‐employment wages. However, 20–30 percent of displaced workers experience re‐employment wage gains. Theoretically, workers with higher search costs accept jobs when the marginal benefit of search is relatively high. When displaced, these workers experience wage gains because they are forced into additional search. Using data from the Displaced Worker Survey, we find that higher search costs (measured as the wage residual from the predisplacement job) are associated with higher re‐employment wages.