Julian Tiedtke (Sant'Anna School of Advanced Studies)
Angelo Cuzzola
This paper studies heterogeneous effects of job loss across the wage distribution using linked employeremployee administrative data from Portugal (20042021). We identify job displacement through firm closures and mass layoffs, exploiting plausibly exogenous variation in involuntary separation within a matched difference-in-differences event study design. We extend the Callaway and Sant'Anna (2021) estimator to incorporate cohort-specific matched control groups, addressing bias from both negative reweighting and cross-cohort heterogeneity in staggered settings. To characterize workers' position in the wage distribution net of firm-side factors, we adopt the wage determination framework of Bonhomme, Lamadon, and Manresa (2019), recovering unobserved worker types and firm wage classes. We find striking heterogeneity in displacement effects: low-type workers suffer the largest earnings losses in the short run, driven primarily by employment losses, but recover more quickly; high-type workers face more persistent losses, driven by declining hourly wages. Wage losses are more pronounced among higher-type workers, with the lowest-type workers exhibiting no wage scarring a pattern we attribute to the minimum wage acting as an effective wage floor without adverse employment effects. On the firm side, reallocation patterns differ by displacement type mass layoff-displaced workers sort into lower-premium firms while those displaced by firm closures upgrade yet both groups reallocate toward more productive firms that share a smaller fraction of rents with workers, with little heterogeneity across worker types. Firm wage premia explain little of the heterogeneity in wage losses across the distribution, suggesting a more limited role for firm-side factors than is commonly assumed.