Reemployment or Unemployment

Abstract

Previous research on displaced workers’ labor market prospects shows that workers with a higher educational level are substantially more likely to return to employment than low-educated workers. There seem to be two main reasons for this finding. First, the demand for high-skilled labor is rising as a consequence of the automation of production processes and technological change that is skill-biased in favor of highly educated workers. Second, education is an important signal to employers about workers’ unobserved abilities such as their ability to learn. We therefore hypothesize that low- and mid-educated workers encounter more difficulties in finding a job than highly educated workers (hypothesis H1, see Chap. 1.4 ).