Displaced workers experience a range of earnings losses after displacement. Using comprehensive occupational employment data, I estimate the effect of the state-level occupation growth rate in the worker’s pre-displacement occupation on subsequent labor market outcomes and find that adverse labor market conditions in a worker’s occupation at the time of displacement have negative consequences. Displacement from a shrinking occupation is associated with decreased earnings and longer durations of joblessness. Furthermore, holding the occupation growth rate constant, there is only a small effect of the worker’s industry growth rate on their labor market outcomes. These results suggest that vulnerable displaced workers’ difficulties in the labor market are a function of their skills and less related to the goods and services they were previously producing.
