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Rethinking risk in the new economy: Age and cohort effects on unemployment and re-employment

Department of Sociology and Gerontology at Miami University in Oxford, Ohio, lippmas{at}muohio.edu

One of the major risks associated with flexible employment in the new economy is that of sudden and involuntary unemployment. The risk of involuntary unemployment, or displacement, has become widespread in the new economy, threatening workers across firms, occupations and industries. While most workers now face the risk of displacement, some appear better able to negotiate and navigate the flexible labor market that characterizes the `new' economy. Using pooled cross-sectional data covering over 20 years, I examine how workers' abilities to recover from displacement have changed over the past two decades. Specifically, I examine how older workers — typically thought to experience greater risk of displacement and disadvantage in the flexible labor market — fare in the new economy. My results indicate that birth cohort is a better predictor than chronological age of post-displacement employment outcomes, including the duration of unemployment and the likelihood of switching occupations upon re-employment. Those workers who entered the labor market in the years before employment flexibility became widespread suffer the most from displacement. These findings are interpreted from an institutional perspective, which focuses attention on the dramatic changes that have occurred in employment institutions and the employment relationship in the past two decades, and the ways that individuals understand and respond to them. As the social contract between employers and employees has largely been dismantled, those workers who may carry vestiges of the cognitive and cultural frameworks underlying that contract face greater risk of employment and career disruption in the new economy.

Key Words: aging • downsizing • employment • institutional theory • labor markets • organizational theory

Human Relations, Vol. 61, No. 9, 1259-1292 (2008)
DOI: 10.1177/0018726708094912


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