Female Labor Supply following Displacement: A Split-Population Model of Labor Force Participation and Job Search

Following permanent layoffs most women search for new jobs, but some withdraw from the labor force. We develop a joint model of the choice to undertake postdisplacement job search and unemployment durations for searchers and estimate it, using data from the 1988 Displaced Worker Survey. Maximum likelihood estimates of this "split-population" model show that labor force withdrawal is an important factor explaining the distribution of postdisplacement jobless spells. The model also allows us to distinguish the effect of any covariate on the decision to engage in postdisplacement search from its effect on search duration. Single-population models obscure this distinction.