Discussion paper

DP17071 Understanding the Reallocation of Displaced Workers to Firms

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.


Paul, B, C Hémet and C Malgouyres (2022), ‘DP17071 Understanding the Reallocation of Displaced Workers to Firms‘, CEPR Discussion Paper No. 17071. CEPR Press, Paris & London. https://cepr.org/publications/dp17071