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Abstract:
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From 2003 to 2005, 3.8 million US workers who had held their jobs for at least three years lost them due to plant closings or moves, insufficient work, or job shifts and abolishment. Of workers who were displaced for such reasons, 41.5 percent had at most a high school education. These under-educated displaced workers have relatively fewer options and less leverage in the labor market, and thus are most in need of labor market assistance from the federal government. One tool that the Department of Labor uses to assist these workers, and that Congressmen are proposing to expand, is the Worker Adjustment and Retraining Notification Act (WARN), which mandates that certain firms provide sixty-day notice to workers who will be displaced. While previous research has examined advance notice effects on employment outcomes for all displaced workers, the most recent data sets used in that research are now over a decade old. This study explores the extent and significance of the impact of advance notice on employment outcomes for under-educated displaced workers, using new evidence from the 2004 and 2006 Displaced Worker Surveys (DWS). Two separate models estimate the probability of a positive duration of unemployment and the length of unemployment for reemployed displaced workers with more than sixty-day advance notice in an effort to assess the empirical merits of expanding WARN. The results indicate that while sixty-day advance notice significantly reduces the probability of encountering post-displacement unemployment and the overall duration of unemployment for well-educated workers, it has no impact on unemployment probabilities and durations for under-educated workers. Thus, only a fraction of workers would likely benefit from WARN's proposed expansion. |