Are the Lasting E¤ects of Employee-Employer Separations
induced by Layo¤ and Disability Similar? Exploring Job
Displacements using Survey and Administrative Data
Melissa J. Bjellandy
Cornell University
October 30, 2005
Abstract
This paper integrates the existing literatures on displacement and health by examining the enduring
e¤ects of job dislocations that are induced by
rm and individual shocks to employment. A joint es-
timation of hourly wage rates and weekly hours illuminates the disparities in these economic outcomes
that exist between those who have reestablished themselves in the workplace subsequent to a layo¤ and
those who have returned to work following the onset of a disability relative to those with uninterrupted
job histories. As an extension of these ideas, employment transitions and workplace adjustments are
modeled to capture spousal reactions to these shocks. Multiple indicators of health from the Survey of
Income and Program Participation and Social Security Administrative bene
ts records are incorporated
into the analyses of those with impairments that prompted job loss. These measures allow knowledge
to be gleaned regarding the qualitative di¤erences in the lasting impacts of job cessation resulting from
medically diagnosed illnesses as compared to estimates uncovered using survey data sources alone. By
considering time durations following these periods of separation in light of these indicators of well-being,
a more comprehensive understanding of the long-run repercussions of employee-employer separation is
acquired.
1 Introduction
Studies that explore the lingering impacts of mass layo¤ have extensively documented the persistence of
rm-side shocks that result in permanent job loss. As an inaugural researcher in this area, Ruhm (1991)
noted the insu¢ cient knowledge of the adjustment period subsequent to employer-initiated displacing events
and endeavored to address this issue. His discovery of substantial earnings losses that are sustained for years
beyond the date of dislocation propaga