PREDICTING DISPLACED WORKER INDUSTRY SWITCHING - TARGETING TRAINING-PROGRAMS

The high cost of providing formal training to displaced workers, combi ned with the lack of consistent evidence to support training program e ffectiveness, has prompted researchers and policy makers to suggest th at formal training be offered only to select groups of displaced worke rs. This paper reviews theoretical and empirical outcomes suggesting t hat displaced workers who are likely to switch industries as a result of displacement are one group toward which formal training could be ta rgeted. Given this motivation, the paper goes on to examine the empiri cal framework for such targeting. Estimates presented indicate that wo rkers displaced from industries that employ only a small fraction of t heir local labor force are more likely to switch industries after disp lacement. In addition, the relative importance of workers' pre-displac ement industries in their local labor markets is a stronger predictor of industry switching than other commonly used measures of local labor market conditions.