Comparative Analysis of Wage Losses Among Displaced Workers in France and the United States

The Comparative Analysis of Wage Losses among displaced workers in France and the United States addresses the significant issue of worker displacement. This phenomenon, characterized by permanent job losses due to industrial restructuring, plant closures, and mass layoffs, has garnered considerable attention in recent years. The paper aims to provide a comprehensive assessment of the consequences of worker displacement in both countries. Existing research predominantly focuses on the United States, revealing that displaced workers often experience severe earnings losses, typically ranging from 10% to 25%. In contrast, evidence from European countries remains limited, leading to questions about the comparability of wage losses across these regions. The study utilizes a unified econometric framework to estimate wage losses, drawing on longitudinal micro-data from French employment surveys and the US Panel Study of Income Dynamics. This approach allows for a more accurate comparison of the determinants of wage adjustments in both contexts, highlighting the need for a deeper understanding of the structural factors influencing these outcomes.

The analysis reveals that wage losses for displaced workers in France and the United States are comparable, averaging between 10% and 15%. However, the underlying causes of these losses differ significantly. In France, the predominant factor contributing to wage decline is the loss of accumulated firm-specific earnings potential. This loss is attributed to the disruption of long-term employment relationships, where seniority plays a crucial role in determining earnings. Conversely, in the United States, a substantial portion of wage losses stems from match heterogeneity, where displaced workers often find themselves in lower-quality job matches. This distinction underscores the importance of understanding the labor market dynamics in each country. The paper emphasizes that while both factors contribute to wage adjustments, the relative impact varies, necessitating tailored policy responses to address the unique challenges faced by displaced workers in each context.

Identifying the sources of wage adjustments is critical for informing public policy aimed at mitigating the costs of worker displacement. The findings suggest that policies focusing on training and job search assistance could be particularly beneficial in the United States, where match quality significantly influences wage outcomes. In contrast, France may require policies that address the loss of firm-specific earnings potential, potentially through initiatives that enhance job security and promote long-term employment relationships. The paper calls for further research to explore the structural determinants of wage losses in greater depth. Understanding the nuances of labor market dynamics in both countries will provide valuable insights for policymakers and researchers alike. By disentangling the contributions of seniority and match quality, future studies can better inform strategies to support displaced workers and enhance their re-employment prospects.