Gian Marco Pinna (University of Rome Tor Vergata)
Existing research on the cost of job loss has often overlooked the role of job sorting following displacement in contributing to recursive unemployment. This study aims to estimate the decline in job security associated with the occupations matched by displaced employees following their dismissals. Using a dataset containing the employment histories of about four million individuals working in Italy that allows for disentangling voluntary from involuntary job moves, I construct two indicators of job security attached to each specific occupation: one that captures the risk of dismissal and the other that conveys a measure of expected tenure. Then, employing an identification strategy that exploits collective dismissals as exogenous variations and a difference-indifferences methodology that uses not-yet-treated units as a control group, I estimate the impact of job loss on the expected job security of subsequent occupations. I find that displacement leads to an increased risk of dismissal intrinsic to the post-displacement occupations of about 2.38 percentage points and a lower expected tenure of around 156 days. For both indicators, this is approximately equal to a 13% decline in job security compared to pre-displacement averages.