Discussion Paper Details

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Title: Understanding the Reallocation of Displaced Workers to Firms

Author(s): Paul Brandily, Camille Hémet and Clément Malgouyres

Publication Date: February 2022

Keyword(s): Displaced Workers, Labor Share, productivity, reallocation and Wage

Programme Area(s): Labour Economics

Abstract: We study job displacement in France. In the medium run, losses in firmspecific wage premium account for a substantial share of the overall cost of displacement. However, and despite the positive correlation between premium and productivity in the cross-section of firms, we find that workers are reemployed by high productivity, low labor share firms. The observed reallocation is therefore productivity-enhancing, yet costly for workers. We show that destination firms are less likely to conclude collective wage agreements and have lower participation rates at professional elections. Overall, our results point to a loss in bargaining power.

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Bibliographic Reference

Brandily, P, Hémet, C and Malgouyres, C. 2022. 'Understanding the Reallocation of Displaced Workers to Firms'. London, Centre for Economic Policy Research.