Long-term Impact of Job Displacement on Job Quality and Satisfaction: Evidence from Germany

In this research, we investigate the long-term effects of job displacement on several dimensions of job quality and satisfaction, focusing only on individuals who lose their job because of plant closure. Using the German Socio-Economic Panel data from 1984 to 2012, we build a database containing 2,396 individuals who have lost their job because of plant closure. Our control group is created by finding workers who have similar characteristics to the displaced workers before their displacement. The matching method that we use is a coarsened exact matching on pre-treatment covariates and pre-treatment outcomes. We then compare the evolution of job quality in both groups to measure the causal impact of displacement. Our main findings indicate a large and long-lasting impact of displacement on employment prob- ability. The effects of displacement on earnings and hourly wages last until three or four years. As for job security, displaced workers report to be more likely to lose their job again. Indicators of quality of the working environment (working full time, long hours, distance to work), are all affected by displacement in the long run except the probability of working full time. These results are robust when we focus on individuals who do not experience a significant period out of employment.