Job Security after Displacement and the Role of Cash-on-Hand. New findings published in the Journal of Public Economics

Segmented labor markets, where stable jobs coexist with insecure, high-turnover positions, make job security key to workers’ long-term outcomes. Using Dutch administrative data, we study the impact of displacement on job security and the role of cash-on-hand. One year after displacement, permanent employment falls by about one-fifth and remains lower five years later, amplifying wage losses: displaced workers who lose job security experience losses 21 % larger than those retaining a permanent contract. Exploiting a policy granting lump-sum transfers only to some displaced workers, we find that eligibility attenuates job security losses and, as a result, wage losses. Effects are larger among liquidity-constrained workers, consistent with binding liquidity constraints. Our findings highlight job security as a key channel through which cash-on-hand reduces the long-run costs of job loss, with implications for the design of unemployment insurance.

 

Article citation

Ana Figueiredo, Olivier Marie, and Agnieszka Markiewicz, ‘The unequal job security scars of displacement', Journal of Public Economics, Volume 255, March 2026, doi.org/10.1016/j.jpubeco.2025.105562.