Report
Wage Insurance for Displaced Workers
Abstract: Wage insurance provides income support to displaced workers who find reemployment at a lower wage. We analyze wage insurance in the context of the U.S. Trade Adjustment Assistance (TAA) program by merging linked employer-employee Census data to TAA petitions and leveraging a discontinuity in eligibility based on worker age. Wage insurance eligibility increases short-run employment probabilities and leads to higher long-run cumulative earnings. We find shorter non-employment durations largely drive increased long-term earnings among workers eligible for wage insurance. Our results are quantitatively consistent with a standard non-stationary partial equilibrium search model. The program is self-financing even under conservative assumptions.
Keywords: social insurance; displaced workers; regression discontinuity;
JEL Classification: J6; J65; J01;
https://doi.org/10.59576/sr.1105
Access Documents
File(s):
File format is application/pdf
https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr1105.pdf
Description: Full text
File(s):
File format is text/html
https://www.newyorkfed.org/research/staff_reports/sr1105.html
Description: Summary
Bibliographic Information
Provider: Federal Reserve Bank of New York
Part of Series: Staff Reports
Publication Date: 2024-05-01
Number: 1105