DP17071 Understanding the Reallocation of Displaced Workers to Firms

Author(s): Paul Brandily, Camille Hémet, Clément Malgouyres
Publication Date: February 2022
Keyword(s): Displaced Workers, Labor Share, productivity, reallocation, Wage
JEL(s): J31, J63
Programme Areas: Labour Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=17071

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.