W/age bias in worker displacement: how industrial structure shapes the job loss and earnings decline of older American workers

This paper examines age differences in patterns of worker displacement and employment and earnings changes of displaced workers. Data from the 1998 Displaced Worker Supplement (DWS) of the Current Population Survey (CPS) indicate that older displaced workers possessed higher weekly wages than did younger workers at the time of their displacement. Moreover, older displaced workers suffered greater amounts of earnings loss than did younger displaced workers. Older workers, more often than younger workers, were displaced from jobs in the goods-producing sector. We attribute this age and industry difference in displacement to the higher earnings premium of older workers in the goods producing sector relative to the earnings premium of older workers in the service-producing sector. The age bias against older displaced workers may be viewed as part of social structural changes in the economy that have reduced the wage premium of the more expensive age segment of the workforce within industries that may economically benefit the most.