Earnings losses of Connecticut workers affected by mass layoff are calculated using administrative data. Estimated reductions are initially more than 30 percent and six years later, as much as 15 percent. The Connecticut estimates are smaller than comparable ones from Pennsylvania administrative data but similar to those from the Panel Study of Income Dynamics (PSID) and Department of Workforce Services (DWS). Earnings reductions in Connecticut and Pennsylvania are concentrated among Unemployment Insurance recipients. An unusually high proportion of Unemployment Insurance beneficiaries in Pennsylvania explains the larger estimated losses relative to other studies. Fixed-effects, random growth, and matching estimators produced similar earnings loss estimates suggesting each is relatively unbiased in this context. (J31, J 63, J65, R23)

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This article provides detailed estimates of earnings losses of older workers (aged 40 years and older) who experience mass layoffs relative to a continuously employed comparison group. The analysis made use of information from the unemployment insurance system for the state of Connecticut. These administrative records contain payroll information for virtually all workers in the state and, relative to previous research on the basis of survey data, contain many more instances of workers displaced because of mass layoffs. These data provided the basis for detailed, disaggregated estimates by age, gender, and industry of employment. The estimates indicated that earnings losses associated with displacement rose sharply with age and were larger for those subsequently reemployed in different industry sectors. These findings are consistent with the idea that earnings decline following displacement due to losses of firm-specific human capital. Earnings reductions were larger for men than women but were proportionately very similar.

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