Involuntary job loss: Welfare effects, earnings impacts, and policy options

From jobs lost each year,

at least three billion dollars

of wages foregone.

Workers who lose their jobs involuntarily have lower mental health and economic security in the short term — and lower earnings and physical health in the long term. 

In this paper, we estimated the net present value of lifetime wages lost by the New Zealanders who involuntarily lose their jobs in a year. The value is between $3.3 and $15.4 billion, depending on economic conditions.

Unemployment insurance/benefits can mitigate the short-term effects of involuntary job loss. By contrast, training and job placement programs are typically ineffective.

DOI: doi.org/10.29310/WP.2021.06