Job Displacement And The Inter Temporal Movement Of Workers Through The Earnings And Income Distributions

This paper uses the Panel Study of Income Dynamics to examine how job displacement influences intragenerational earnings and income mobility. Job displacement increases the probability of downward labor earnings mobility for several years after separation occurs. Furthermore, the probability of being in the bottom half of the earnings distribution increases significantly, not only in the year of displacement, but also for several years afterwards. However, after considering additional measures of financial well-being (income from other family members and government transfer payments), the short- and long-term impact of displacement on movements throughout the distribution is reduced.