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α: calibrated so average coauthorship-adjusted count equals average raw count
This paper attempts to quantify preseparation earnings losses of workers displaced in mass layoffs using the Displaced Worker Survey, the largest and most representative sample of displaced workers. Using the 1986 Displaced Worker Survey and random samples of the 1984 and 1985 Current Population Survey as a comparison group, it is found that workers lose on average 9 percent of their earnings prior to separation as a result of wage cuts. This result is very similar to the preseparation losses found in other studies using different data sources. One implication of this finding is that those studies that only take into consideration the post-displacement losses of workers displaced in mass layoffs clearly underestimate the total costs suffered by these workers.