Over the last three decades, structural changes in the American labor market eliminated many highly‐paid, stable jobs that had previously been available to workers with a high school diploma or less. Job security is important, particularly for the least advantaged, who may be less able to adjust to income losses than other workers and less able to plan for the future when jobs are not secure. Job loss is likely to have deleterious consequences for less‐educated workers as they are less likely than others to receive severance packages and more likely to have difficulty finding new jobs.
This paper addresses several questions about changes in employment stability over the last three decades: How likely is it that a man who is employed in one year is unemployed two years later? Conversely, how likely is it that a man who is unemployed in one year is employed two years later? How have these probabilities changed over time? How do trends in employment security differ for workers classified by education and race?
We analyze longitudinal data from the Panel Study of Income Dynamics (PSID) for the period from 1968 through 2003. We compare the unemployment risk of employed male household heads classified by age, educational attainment, and race. We find that younger, less‐educated, and minority male workers have a higher risk of becoming unemployed over at two‐year period and a lower probability of moving from unemployment back to employment.