Description
Abstract: This paper looks at the impact industry instability has on worker separations. Workers leave firms one of two ways: (i) voluntarily by quitting; or (ii) involuntarily through firm layoffs. Using data drawn from the Longitudinal Worker File, a Canadian firm-worker matched employment database, we are able distinguish between voluntary and involuntary separations using information on reasons for separations and assess the impact industry shutdown rates have on worker separation rates, both voluntarily and involuntarily. Once controlling for various factors and potential selection bias, we find that industry shutdown rates have a positive and significant effect on the overall separation, layoff and quit rates of workers. Finally, industry instability has a much larger impact on layoff rates when comparing voluntary and involuntary separations.