Publication:
Labor Market Scarring in a Developing Economy: Stigma versus Lost Human Capital from Plant Closings in Mexico

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dc.contributor.authorArias, Francisco J.
dc.contributor.authorLederman, Daniel
dc.date.accessioned2025-05-08T21:44:03Z
dc.date.available2025-05-08T21:44:03Z
dc.date.issued2025-05-08
dc.description.abstractThis paper estimates the magnitude of labor market scarring in a developing economy, a setting that has been understudied by the labor scarring literature dominated by advanced economies. The paper assesses the contributions of “stigma” versus “lost human capital,” which cause earnings losses among displaced workers relative to non-displaced workers. The findings indicate that job separations caused by plant closings result in sizable and long-lasting reductions in earnings, with an average decline of 7.5 percent in hourly wages over a nine-year period. The estimate for one year after a plant closing is larger, at a decline of 10.8 percent. In a common sample, after controlling for unobserved, time-invariant individual characteristics, the impact of a plant closing declines from 11.9 to 8.2 percent. These results imply that stigma in the labor market due to imperfect information about workers (captured by unobservable worker characteristics) accounts for 30.8 percent of the average earnings losses, whereas lost employer-specific human capital explains the remaining 69.2 percent. The paper explores the effects of job separations due to plant closings on other labor market outcomes, including hours worked and informality, and provides estimates across genders and levels of education.en
dc.identifierhttp://documents.worldbank.org/curated/en/099731005072580094
dc.identifier.doihttps://doi.org/10.1596/1813-9450-11116
dc.identifier.urihttps://hdl.handle.net/10986/43166
dc.languageEnglish
dc.language.isoen_US
dc.publisherWashington, DC: World Bank
dc.relation.ispartofseriesPolicy Research Working Paper; 11116
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttps://creativecommons.org/licenses/by/3.0/igo/
dc.subjectLABOR MARKET
dc.subjectJOB DISPLACEMENT
dc.subjectWAGES
dc.subjectEDUCATION
dc.subjectDIFFERENCE IN DIFFERENCE
dc.titleLabor Market Scarring in a Developing Economyen
dc.title.subtitleStigma versus Lost Human Capital from Plant Closings in Mexicoen
dc.typeWorking Paper
dspace.entity.typePublication
okr.date.disclosure2025-05-08
okr.date.doiregistration2025-05-10T02:56:33.384432Z
okr.date.lastmodified2025-05-08T15:05:00Zen
okr.doctypePolicy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/099731005072580094
okr.guid099731005072580094
okr.identifier.docmidIDU-6f227a1f-d35d-4fee-9594-676a7f31b05a
okr.identifier.doi10.1596/1813-9450-11116
okr.identifier.externaldocumentum40011462
okr.identifier.internaldocumentum40011462
okr.identifier.reportWPS11116
okr.import.id7311
okr.importedtrueen
okr.language.supporteden
okr.pdfurlhttps://documents.worldbank.org/curated/en/099731005072580094/pdf/IDU-6f227a1f-d35d-4fee-9594-676a7f31b05a.pdfen
okr.region.administrativeLatin America and Caribbean
okr.region.countryMexico
okr.topicEducation::Education For All
okr.topicHealth, Nutrition and Population::Demographics
okr.topicSocial Protections and Labor::Wages, Compensation & Benefits
okr.topicSocial Protections and Labor::Employment and Unemployment
okr.topicSocial Protections and Labor::Labor Markets
okr.unitEFIAT; EFICE - EFI Chief Economist Office
relation.isAuthorOfPublication2c812f70-403a-5905-88e4-bd90a5f31e96
relation.isAuthorOfPublication.latestForDiscovery2c812f70-403a-5905-88e4-bd90a5f31e96
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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