November 1998, Vol. 121, No. 11
Précis
Careers and displacement symposium
Careers and displacement symposium
The October 1998 issue of Industrial Relations carried a five-article mini-symposium on Careers and Displacement. Dave E. Marcotte examined the possible impact of more short-term contracting, less stable employment relationships, and more common involuntary job separations on wage-tenure profiles. He finds that the seniority-wage premium may be becoming less important. This implies that there is less willingness on the part of firms and workers to make the joint investment in training necessary to sustain more sizable premia for tenure. Thus, Marcotte asserts, "[W]age growth over a career will depend less on these arrangements between workers and firms and more on workers’ own efforts to continually develop marketable productive abilities."James Monks and Steven D. Pizer analyze the turnover issue that Marcotte cited as underlying some of the unwillingness of workers to enter relationships that reward long seniority. They find that between 1971 and 1990, there had been an increase in the probability that a young man would change jobs. Monks and Pizer also found that the increase in turnover was reflected in both its voluntary and involuntary components. These findings raised the authors’ concern that more frequent job changes would, along the lines laid out in Marcotte’s article, lessen incentives for firms and workers to make joint investments that would benefit them both. Monks and Pizer also note that among white workers, most of the increase in turnover was involuntary, while among non-white workers, both voluntary and involuntary turnover increased.
Robert W. Fairlie and Lori G. Kletzer further refine the research they have done in the past on differences in the displacement and reeemployment experiences of black and white workers. (See, for example, their articles in the July 1991 and September 1996 issues of this Review.) They find that during the 1980’s, black men were almost 30 percent more likely to be displaced than were white men and were 30 percent less likely to be reemployed. In this study, they also decomposed some of the broad individual and labor market characteristics that could influence these differences. They find that slightly less than one-fifth of the displacement rate gap can be explained by racial differences in worker or job characteristics. Fairlie and Kletzer also conclude that a large part of the gap in reemployment is not explained by racial differences in job or other personal characteristics. They do suggest that differences in educational attainment and occupation are the most important identifiable characteristics, while any difference in industry of employment is not a significant factor.
Wendy A. Stock documents the fact that displacement from an industry with a smaller share of local employment is associated with a higher probability of switching industry on reemployment: At the mean, a 1-percentage point decline in employment share increases the probability of switching industry by approximately 3 percent. This is important because workers who switch industries typically endure larger earnings losses than those able to find a new job in their old industry. According to Stock, "Workers who switched industries on reemployment experienced approximately 16 percent larger earnings declines than those who remained in the same detailed industry. . . ."
The final piece in the symposium is an event study by Steven E. Abraham on the impact of Montana’s adoption of a wrongful discharge statute. Although most calls for such statutes come from the employee side, the fact that Montana’s judiciary had begun to weaken the State’s statutory at-will employment doctrine in the mid-1970’s led a coalition of business interests to lobby for the wrongful discharge law. Abraham’s study of the impact of specific events in the law’s enactment on the price of stock in firms with primary locations in Montana showed that those firms accumulated positive abnormal returns from the time the State Senate Judiciary Committee recommended passage of the bill it had received from the House.
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