By Louis S. Jacobson, Robert Lalonde, Daniel Gerard Sullivan
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Extra resources for The costs of worker dislocation
But by the fifth year after job loss, the gap had dropped to about 10 percent. This result suggests that earnings of dis- Page 24 placed workers approach what they would have been had the worker not been displaced, not just that earnings approach their prejob loss levels. Indeed, as Kosters assumed, the findings of Seitchik and Zornitsky suggest that most workers had large initial losses that greatly diminished over time. 8 The accuracy of these conclusions is in doubt because of two key shortcomings in Seitchik and Zornitsky's study.
But, some workers are likely to lose their jobs as a result of increased competition. Likewise, controversies over environmental protection often involve similar trade-offs. The benefits associated with protecting the spotted owls in Pacific Northwest forests,3 the salmon in Washington State rivers,4 and the snaildarter in Tennessee waterways5 all come at the cost of lost jobs. As with economic restructuring, society as a whole may benefit from such public policies, but costs are imposed on the workers who lose their jobs.
Among those reemployed at the survey date, Flaim and Seghal found that earnings losses, as measured by the difference between their postand predisplacement weekly earnings, varied considerably depending on their predisplacement industry. Losses of workers in durable goods averaged more than 20 percent. By contrast, the losses of workers in nondurable goods averaged less than 4 percent. These findings were consistent with those in some of the ILAB studies. There are several reasons why it is difficult to interpret Flaim and Seghal's earnings loss estimates.