Authors: Ben Hyman, Brian Kovak, and Adam Leive
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Staff Reports
Wage Insurance for Displaced Workers
Number 1105
May 2024
May 2024
JEL classification: J6, J65, J01
Wage insurance provides income support to displaced workers who find reemployment at a lower wage. We analyze wage insurance in the context of the U.S. Trade Adjustment Assistance (TAA) program by merging linked employer-employee Census data to TAA petitions and leveraging a discontinuity in eligibility based on worker age. Wage insurance eligibility increases short-run employment probabilities and leads to higher long-run cumulative earnings. We find shorter non-employment durations largely drive increased long-term earnings among workers eligible for wage insurance. Our results are quantitatively consistent with a standard non-stationary partial equilibrium search model. The program is self-financing even under conservative assumptions.
Author Disclosure Statement(s)
Benjamin Hyman
1. Sources of financial support for the research:
None
2. Potentially relevant professional and financial relationships in the past 3 years:
Federal Reserve Bank of New York (salary)
Conference travel reimbursement: National Bureau of Economic Research
Seminar travel reimbursement: Various universities
3. Paid or unpaid positions of relevant entities:
None
4. Spousal or family-related COIs:
None
5. Each author must disclose if another party had the right to review the paper prior to its circulation.
The Census Bureau's Disclosure Review Board and Disclosure Avoidance Officers have reviewed this information product for unauthorized disclosure of confidential information and have approved the disclosure avoidance practices applied to this release.
Brian Kovak
1. Sources of financial support for the research:
National Science Foundation
Carnegie Corporation of New York (Carnegie Fellowship)
Block Center for Technology and Society, Carnegie Mellon University
2. Potentially relevant professional and financial relationships in the past 3 years:
Carnegie Mellon University, Professor (salary)
Conference travel reimbursement: National Bureau of Economic Research
Seminar travel reimbursement: Various universities
3. Paid or unpaid positions of relevant entities:
None
4. Spousal or family-related COIs:
None
5. Each author must disclose if another party had the right to review the paper prior to its circulation.
The Census Bureau's Disclosure Review Board and Disclosure Avoidance Officers have reviewed this information product for unauthorized disclosure of confidential information and have approved the disclosure avoidance practices applied to this release.
Adam Leive
1. Sources of financial support for the research:
National Science Foundation
Bankard Fund for Political Economy, University of Virginia
2. Potentially relevant professional and financial relationships in the past 3 years:
University of California at Berkeley, Assistant Professor (salary)
University of Virginia, Assistant Professor (salary)
Conference travel reimbursement: National Bureau of Economic Research
Seminar travel reimbursement: Various universities
3. Paid or unpaid positions of relevant entities:
None
4. Spousal or family-related COIs:
None
5. Each author must disclose if another party had the right to review the paper prior to its circulation.
The Census Bureau's Disclosure Review Board and Disclosure Avoidance Officers have reviewed this information product for unauthorized disclosure of confidential information and have approved the disclosure avoidance practices applied to this release.
Suggested Citation:
Hyman, Benjamin, Brian Kovak, and Adam Leive. 2024. “Wage Insurance for Displaced Workers.” Federal Reserve Bank of New York Staff Reports, no. 1105, May. https://doi.org/10.59576/sr.1105
Hyman, Benjamin, Brian Kovak, and Adam Leive. 2024. “Wage Insurance for Displaced Workers.” Federal Reserve Bank of New York Staff Reports, no. 1105, May. https://doi.org/10.59576/sr.1105
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