Labour market effects of job displacement for prime-age and older workers

Abstract

This paper studies the effects of firm closures associated with bankruptcies on the employment status and wages of prime-age and older workers using Dutch administrative data for the period 2000–2011. Applying difference-in-differences techniques and non-parametric matching, we find adverse effects on the probability to be in work and on wages earned in the new job, which are larger for older workers than for prime-age workers. Within the older-age group, the effects are stronger for formerly long-tenured workers, for older workers who lost their job in declining sectors in the regional labour market and for workers who changed sectors. In the prime-age group, these differences are less pronounced. Our results suggest that job- and sector-specific factors are important for understanding the more vulnerable position of older workers after job loss.