Job Displacement and Intragenerational Mobility

Nicholas A. Jolly, Central Michigan University

The analysis presented here uses the 1968 through 1993 waves of the Panel Study of Income Dynamics to examine how job displacement influences intragenerational earnings and income mobility. Using individual labor earnings, this study shows displacement increases the probability of downward mobility for several years after separation occurs. Furthermore, the probability of being in the bottom half of the labor earnings distribution increases significantly, not only in the year of job loss, but also for several years following displacement. However, income from other family members and government transfer payments mitigates displacement’s adverse effect. After considering these additional measures of financial well being, the short-term impact of displacement on movements throughout the income distribution is reduced, and the long-term effect is eliminated.