Are the Early Leavers the Lucky Ones?
According to previous studies, major workforce downsizings are commonly preceded by increased employee turnover due to ‘early leavers’. There is a common belief that early leavers are winners in terms of re-employment. This seven-year follow-up study based on register data from Finland questions if this is a valid finding in the Nordic context. We set the hypothesis that early leavers are not undisputed winners compared with those who leave during the actual downsizing. Trajectory and sequence analyses were used to test the hypothesis. Six employment trajectories were identified, ranging from permanently strong to permanently weak labor market attachment. Supporting the hypothesis, the early leavers assumed more commonly the weak and less commonly the strong employment trajectory. However, within the weak employment group, the early leavers and ultimately displaced workers were equal in terms of unemployment and retiring, as well as within the strong employment group in terms of income level.
Abbott, A. (1995). Sequence analysis: new methods for old ideas, Annual Review of Sociology 21: 93–113. doi: https://doi.org/10.1146/annurev.so.21.080195.000521.
Addison, J. and Portugal P. (1987). The effect of advance notification of plant closings on unemployment, Industrial and Labor Relations Review 41(1): 3–16. doi: https://doi.org/10.1177/001979398704100101.
Aisenbrey, S. and Fasang, A. (2010). New life for old ideas: ‘The second wave’ of sequence analysis. Bringing the ‘course’ back into the life course, Sociological Methods & Research 38 (3): 420–462. doi: https://doi.org/10.1177/0049124109357532.
Appelqvist, J. (2007). Wage and earnings losses of displaced workers in Finland, Discussion Papers No. 422, Government Institute for Economic Research, Helsinki, Finland.
Beam, E. (2016). Do job fairs matter? Experimental evidence on the impact of job-fair attendance, Journal of Development Economics 120(C):32–40. doi: https://doi.org/10.1016/j.jdeveco.2015.11.004.
von Below, D. & Skogman Thoursie, P. (2010). Last in, first out? Estimating the effect of seniority rules in Sweden, Labour Economics 17(6) 987–999. doi: https://doi.org/10.1016/j.labeco.2010.02.007.
Böheim, R., Hovarth, G. and Winter-Ebmer, R. (2011). Great expectations: past wages and unemployment durations, Labour Economics 18 (6): 778–785. doi: https://doi.org/10.1016/j.labeco.2011.06.009.
Bonin, H., Dohmen, T., Falk, A., Huffman, D. and Sunde, U. (2007). Cross-sectional earnings risk and occupational sorting: the role of risk attitudes, Labour Economics 14 (6): 926–937. doi: https://doi.org/10.1016/j.labeco.2007.06.007.
Bowlus, A. & Vilhuber, L. (2001). Displaced workers, early leavers, and re–employment wages, CIBC Working Papers, 2001–5, CIBC Centre for Human Capital and Productivity, London, ON: Department of Economics, University of Western Ontario.
Bratsberg, B., Fevang, E. & Røed, K. (2013). Job loss and disability insurance, Labour Economics 24 (C):137–150. doi: https://doi.org/10.1016/j.labeco.2013.08.004.
Brzinsky-Fay, C., Kohler, U. & Luniak, M. (2006). Sequence analysis with Stata, The Stata Journal 6(4): 435–460. doi: https://doi.org/10.1177/1536867X0600600401.
Burda, M. & Mertens, A. (2001). Estimating wage losses of displaced workers in Germany, Labour Economics 8 (1):15–41. doi: https://doi.org/10.1016/S0927-5371(00)00022-1.
Cahuc, P., Carcillo, S. & Zylberberg, A. (2014). Labor Economics, MIT Press, Cambridge, US.
Eliason, M. & Storrie, D. (2006). Lasting or latent scars? Swedish evidence on the long-term effects of job displacement, Journal of Labor Economics 24(4): 831–856. doi: https://doi.org/10.1086/506487.
Emmenegger, P., Häusermann, S., Palier, B. &Martin S-K. (eds) (2012). The Age of Dualization: The Changing Face of Inequality in Deindustrializing Societies, New York, Oxford University Press.
Farber, H. (2005). What do we know about Job Loss in the United States? Evidence from the Displaced Workers Survey, 1984–2004, Working paper 498, Princeton University, Industrial Relations Section.
Folbre, N., Leighton, J. & Roderick, M. (1984). Plant closings and their regulation in Maine, 1971–1982, Industrial and Labor Relations Review 37(2): 185–196. doi: https://doi.org/10.1177/001979398403700202.
Frederiksen, A. & Westergaard-Nielsen, N. (2007). Where did they go? Modelling transitions out of jobs, Labour Economics 14(5): 811–828. doi: https://doi.org/10.1016/j.labeco.2006.09.003.
Gauthier, J-A., Widmer, E., Bucher, P. & Notredame, C. (2010). Multichannel sequence analysis applied to social science data, Sociological Methodology 40(1):1–38. doi: https://doi.org/10.1111/j.1467-9531.2010.01227.x.
von Greiff, J. (2009). Displacement and self-employment entry, Labour Economics 16(5): 556–56. doi: https://doi.org/10.1016/j.labeco.2009.02.005.
Henningsen, M. & Hægeland, T. (2008). Downsizing as a sorting device. Are low-productive workers more likely to leave downsizing firms? Discussion Papers No. 543, Statistics Norway.
Holmlund, B. & Lang, H. (1985). Quit behaviour under imperfect information: searching, moving, learning, Economic Inquiry 23(4): 382–393. doi: https://doi.org/10.1111/j.1465-7295.1985.tb01774.x.
van Huizen, T. & Alessie, R. (2016). Risk aversion and job mobility, Discussion Paper Series/Tjalling C. Koopmans Research Institute 16.09.
Huttunen, K., Møen, J. & Salvanes, K. (2011). How destructive is creative destruction? Effects of job loss on job mobility, withdrawal and income, Journal of the European Economic Association 9(5): 840–870. doi: https://doi.org/10.1111/j.1542-4774.2011.01027.x.
Jolkkonen A. & Kurvinen, A. (2009.: Joustavuus ja turvallisuus irtisanomistilanteessa – Tapaustutkimus Perlos Oyj:n tuotannon lopettamisesta Joensuun seudulla. [Flexibility and security in a lay-off situation – A case study of the closing down of the Perlos Ltd plants in the Joensuu region], Työ- ja elinkeinoministeriön julkaisuja. Työ ja yrittäjyys 72/2009.
Jolkkonen, A. Koistinen, P. Kurvinen, A. Lipiäinen, L. Nummi, T. & Virtanen, P. (2017a) Labour Market Attachment Following Major Workforce Downsizings: A Comparison of Displaced and Retained Workers, Work, Employment & Society 32(6): 992–1010. doi: https://doi.org/10.1177/0950017017706305
Jolkkonen, A. Koistinen, P. Kurvinen, A. Lipiäinen, L. Nummi, T. & Virtanen, P. (2017b). Time of displacement as a predictor of re-employment, Nordic Journal of Working Life Studies 7(2): 87–106. doi: https://doi.org/10.18291/njwls.v7i2.81596.
Jung, T. & Wickrama, K. (2008). An introduction to latent class growth analysis and growth mixture modeling, Social and Personality Psychology Compass 2(1): 302–317. doi: https://doi.org/10.1111/j.1751-9004.2007.00054.x
Knabe, A. & Rätzel, S. (2011). Scarring or scaring? The psychological impact of past unemployment and future unemployment risk, Economica 78(310): 283–293. doi: http://dx.doi.org/10.1111/j.1468-0335.2009.00816.x
Korkeamäki, O. & Kyyrä, T. (2014). A distributional analysis of earnings losses of displaced workers in an economic depression and recovery, Oxford Bulletin of Economics and Statistics 76, pp. 565–588.
Lengermann, P. & Vilhuber, L. (2002). Abandoning the sinking ship: the composition of worker flows prior to displacement, Technical Paper TP-2002-11. U.S. Census Bureau, LEHD Program.
Lindbeck, A.& Snower, D.J. (1991) Interactions between the efficiency wage and insider-outsider theories. Elsevier. Economics Letters 37(2): 193–196. doi: https://doi.org/10.1016/0165-1765(91)90130-D.
Lim, V., Chen, D., Aw, C. & Tan, M. (2016). Unemployed and exhausted? Job-search fatigue and reemployment quality, Journal of Vocational Behavior 92: 68–78. doi: https://doi.org/10.1016/j.jvb.2015.11.003.
Lindbeck, A. & Snower D.J. (2001) Insiders versus outsiders, Journal of Economic Perspectives 15(1): 165–188. doi: https://www.jstor.org/stable/2696546?seq=1.
Martikainen, P., Mäki, N & Jäntti, M., (2007) The effects of unemployment on mortality following workplace downsizing and workplace closure: a register-based followup study of Finnish men and women during economic boom and recession, American Journal of Epidemiology 165(9): 1070–1075. doi: https://doi.org/10.1093/aje/kwm057.
McCall, J. (1970). Economics of information and job search, Quarterly Journal of Economics 84(1): 113–126. doi: https://doi.org/10.2307/1879403.
Mortensen, D. (1970). Job search, the duration of unemployment, and the Phillips curve, American Economic Review 60(5): 505–517. doi: https://www.jstor.org/stable/1818285
Muffels, R., Crouch, C. & Wilthagen, T. (2014). Flexibility and security: national social models in transitional labour markets, Transfer: European Review of Labour and Research 20(1):99–114. doi: https://doi.org/10.1177/1024258913514361.
Muthén, B. (2001). Latent variable mixture modeling, Marcoulides G. & Schumacker, R., New Developments and Techniques in Structural Equation Modeling, Erlbaum Associates, Lawrence, 1–33.
Muthén, B. (2004). Latent variable analysis: Growth mixture modeling and related techniques for longitudinal data, Kaplan, D., Handbook of quantitative methodology for the social sciences, Sage Publications, Newbury Park, CA, 345–368.
Nagin, D. (1999). Analyzing developmental trajectories: Semi-parametric, group-based approach, Psychological Methods 4(2):39–177. doi: https://doi.org/10.1037/1082-989X.4.2.139.
Nagin, D. (2005). Group-based modeling of development, Cambridge, MA: Harvard University Press.
Nedelkoska, L., Neffke, F. & Wiederhold, S. (2015). Skill Mismatch and the Costs of Job Displacement. Center for International Development at Harvard University (CID) Research Fellow and Graduate Student Working Paper No. 122, September 2015.
Ormiston, R. (2014). Worker displacement and occupation-specific human capital, Work and Occupations 41(3): 350–384. doi: https://doi.org/10.1177/0730888414531500.
Pfann, G. & Hamermesh, D. (2008). Two-sided learning, labor turnover and worker displacement, Jahrbücher für Nationalökonomie und Statistik 228(5): 423–445.
Schwerdt, G. (2011). Labour turnover before plant closure: “Leaving the sinking ship” vs. “Captain throwing ballast overboard, Labour Economics 18(1): 93–101. doi: https://doi.org/10.1016/j.labeco.2010.08.003.
Stigler, G. (1961). The economics of information, Journal of Political Economy 69(3): 213–225. doi: https://doi.org/10.1086/258464.
Stigler, G. (1962). Information in the labor market, Journal of Political Economy 70(5): 94–105. doi: https://doi.org/10.1086/258727.
TEM Raportteja (2012) Työvoiman käyttötapojen ja työn tekemisen muotojen muutostrendejä selvittävän ja kehittävän työryhmän väliraportti [Interim report of the working group examining and developing change trends in the use of the labour force and in the ways of work], TEM Raportteja 16/2012, Työ- ja elinkeinoministeriö, Helsinki.
Valenduc, G. (2018) Technological revolutions and societal transitions, ETUI Research Paper - Foresight Brief, 04-April 2018.
Verho, J. (2008) Scars of recession: the long-term costs of the Finnish economic crisis, Working paper 9. IFAU – Institute for Labour Market Policy Evaluation, Uppsala.
Copyright (c) 2020 Author and Journal
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
The Copyright Holder of this Journal is the authors and the Journal. This Journal gives Open Access with CreativeCommons license CC-BY-NC-ND 4.0.
You can download all the content of the Journal and share it with others as long as you credit the authors and the journal, but you can’t change it in any way or use it commercially.
More specifically this license means that you – authors and users – may:
Share — copy and redistribute the material in any medium or form as long as you follow the license terms. The freedom to share includes parallel publishing on authors’ own website and in institutional repositories or in ResearchGate after publication in NJWLS, or if you want to reprint your article as part of publication of a PhD-thesis or a dissertation
You may share under these terms:
Attribution — You must give appropriate credit and provide a link to the license. Appropriate credit implies that you provide the name of the creator and attribution parties, a copyright notice, a license notice, a disclaimer notice, and a link to the material. The link used should be its DOI.
NonCommercial — You may not use the material for commercial purposes. A commercial use is one primarily intended for commercial advantage or monetary compensation.
NoDerivatives — If you remix, transform, or build upon the material, you may not distribute the modified material. Merely changing the format never creates a derivative.
Exceptions to the license terms may be granted
If you want to use content in the Journal in another way then described by this license, you must contact the licensor and ask for permission. Contact Bo Carstens at firstname.lastname@example.org. Exceptions are always given for specific purposes and specific content only.
The Journal is listed as a blue journal in Sherpa/Romeo, meaning that the author can archive post-print ((ie final draft post-refereeing) and author can archive publisher's version/PDF.
Copyright of others
Authors are responsible for obtaining permission from copyright holders for reproducing any illustrations, tables, figures or lengthy quotations previously published elsewhere.
All published material is archived at Roskilde University Library, Denmark, and transmitted to the Danish Royal Library in conformity with the Danish rules of legal deposit.
We do not screen articles for plagiarism. It is the responsibility of the authors to make sure they do not plagiate.