Displacement, Asymmetric Information and Heterogeneous Human Capital
Luojia Hu
Christopher Taber
In a seminal paper Gibbons
and Katz (1991; GK) develop
and empirically test an
asymmetric information model
of the labor market. The
model predicts that wage
losses following
displacement should be
larger for layoffs than for
plant closings, which was
borne out by data from the
Displaced Workers Survey
(DWS). In this paper, we
take advantage of many more
years of DWS data to examine
how the difference in wage
losses across plant closing
and layoff varies with race
and gender. We find that the
differences between white
males and the other groups
are striking and complex.
The
Working Paper
(PDF,311KB)
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