Understanding the Reallocation of Displaced Workers to Firms

We investigate the cost of job displacement using administrative data from France that covers employer and employee over both employment unemployment spells. find displaced workers experience earnings losses because a decline in hours worked (especially short run) lower re-employment hourly wages. In line with an active literature, we loss employer-specific wage premium drives most long run. However, tend to be re-employed by more productive firms. This result contrasts strikingly strong positive correlation between firms' productivity cross-section. further show firms also display labor shares. Overall, our results commonly estimated following does not reflect reallocation toward low Instead they are consistent bargaining power towards low-labor share