Work

The unequal job security scars of displacement

Year: 2026

Type: article

Abstract: Segmented labor markets, where stable jobs coexist with insecure, high-turnover positions, make job security key to workers’ long-term outcomes. Using Dutch administrative data, we study the impact of displacement on job security and the role of cash-on-hand. One year after displacement, permanent employment falls by about one-fifth and remains lower five years later, amplifying wage losses: displaced workers who lose job security experience losses 21 % larger than those retaining a permanent contract. Exploiting a policy granting lump-sum transfers only to some displaced workers, we find that eligibility attenuates job security losses and, as a result, wage losses. Effects are larger among liquidity-constrained workers, consistent with binding liquidity constraints. Our findings highlight job security as a key channel through which cash-on-hand reduces the long-run costs of job loss, with implications for the design of unemployment insurance.

Source: Journal of Public Economics

DOI: 10.1016/j.jpubeco.2025.105562

Authors: Ana Figueiredo, Olivier Marie, Agnieszka Markiewicz

Institutions: IZA - Institute of Labor Economics, Tinbergen Institute, Centre for Economic Policy Research, Vrije Universiteit Amsterdam, Erasmus University Rotterdam

Language: English

Topic: Labor market dynamics and wage inequality

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Decent work and economic growth, No poverty, Reduced inequalities

Open Access status: hybrid

Estimated APC paid: $4,510