infonet-economy

Using Swiss Labor Force Survey data from 1996 to 2009, the authors estimate the earning losses of workers experiencing an involuntary job loss. Two empirical strategies are followed: the standard approach of the earning losses literature and a new method that allows to consider the full set of involuntary separations, also those individuals with zero earnings because of unemployment. Using the first approach the authors estimate an immediate loss of 11%, and a long-term loss of about 9%. Using the second method the authors estimate an earning loss of 50% in the year of separation and a long-term loss of about 19%. With respect to other reasons for separation, the earning loss pattern is unique for involuntary separations. Analyzing the determinants of an involuntary job loss, the authors find out that education plays a major role against the risk of an involuntary separation and this element has a unique pattern with reference to the other reasons for separation.