The impacts of job displacement on workers by education level

Workers with degrees    
suffer more financially    
when made unemployed.    

This research note extends previous research by Hyslop and Townsend (2017; 2019) on the longer term impacts of job displacement on workers labour market outcomes, to examine the impacts for workers with different levels of education. It uses data from the Survey of Family, Income and Employment (SoFIE) to identify job displacements over the period 2001–10, matched to administrative data from Statistics New Zealand’s Integrated Data Infrastructure (IDI) covering the period 1999–2015, to facilitate at least five years of post-displacement observations. The results suggest that displaced workers with degree-level education experience larger adverse short-term employment effects, smaller medium to longer term employment effects, but larger and enduring earnings losses, than other displaced workers. The patterns are consistent with various hypotheses, including that, after a period of unsuccessful job search, degree-level educated workers may accept either lower skilled jobs or jobs with worse skill match. Alternatively, they may experience greater loss of either firm or industry-specific human capital, or lose substantial earnings premiums when displaced, that are difficult to replace.

More information is available at the Productivity Commission of New Zealand's website.