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The impact of job security on job satisfaction in economic contractions versus

expansions

Article  in  Applied Economics · January 2015

DOI: 10.1080/00036846.2014.914148

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Benjamin Artz Ilker Kaya

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The impact of job security on job satisfaction in economic contractions versus expansions

Running title: Job security and job satisfaction in contractions versus expansions

By

B. Artz1 and I. Kaya2,*

Job security, often measured using the perceived risk of job loss in the near future, is a

significant determinant of job satisfaction. We posit that the impact job security has on job

satisfaction is not only a function of how likely it is that a worker loses a job, but how likely it is

that a worker could find another. The effect this has on worker job satisfaction then is different

depending on whether perceived job loss occurs (or not) when job openings are scarce or when

job openings are plentiful. We use difference-in-differences analysis of the 1997 and 2008

waves from the National Study of the Changing Workforce to show that three measures of job

security increase private sector worker job satisfaction, and reduce worker incentives to quit,

more when job openings are relatively scarce than when job openings are relatively plentiful.

We find that our results are strongest among less-educated workers.

                                                                                                                       
1
 Department of Economics, College of Business, University of Wisconsin – Oshkosh, 800
Algoma Blvd., Oshkosh, WI 54901. E-mail address: artzb@uwosh.edu  
2
 Department of Economics, School of Business, American University of Sharjah
PO Box 26666, Sharjah, UAE  
*
 Corresponding author. E-mail address: ikaya@aus.edu  

 
  

1. Introduction and literature review

Job satisfaction is growing as a subject of economic research as it has been linked to

important labor market outcomes such as quits, absenteeism and worker training. Discovering

determinants of job satisfaction is also a blossoming area of research. Security from job loss is

one such determinant and has been studied before, in large part using European data. No such

study exists to our knowledge using US data while accounting for variations in the business

cycle though. This is an important consideration, as it is the macroeconomic condition at the

time of the survey that helps to inform the worker as to whether he or she is secure from job loss.

Moreover and particularly in the case of the Great Recession the rate of job loss itself tends to be

a lagging indicator while the rate of job openings tends to be a leading indicator3. Since job

openings decrease before job losses increase, workers may perceive the same level of job

security in expansionary growth periods as at the beginning of contractionary growth periods.

This reduction in the rate of job openings that occurs prior to increases in the rate of job

losses presents a unique way to identify the impact that job security has on job satisfaction.

Namely the variation in job satisfaction explained by job security in these instances is not only

generated by the probability of job loss itself, but also by the workers’ perceptions of the length

and outcome of the job search that they might expect post-job loss. If security from job loss is a

more valuable job amenity when unemployment is more likely to persist and perhaps end in a

worse job, worker job satisfaction may increase with job security more when job openings are

scarce than when job openings are plentiful.

                                                                                                                       
3
According to the Bureau of Labor Statistics Business Employment Dynamics data, job gains
arguably began to fall in the second quarter of 2007 whereas job losses did not begin to increase
until the second quarter of 2008.
2  
 
  

Indeed evidence from the Great Recession indicates workers have much to be concerned

about in unemployment after a job loss. Farber (2010), using data from the Current Population

Survey (CPS) 1976-2010, not only finds that the rate of job loss is considerably higher from

2007-2009 than in many earlier periods, but also that compared to earlier recessions post-job loss

re-employment rates are lower in the Great Recession, part-time employment is more common

among full-time job losers, and reductions in average earnings are larger. As a result workers

during the Great Recession (2007 – 2009) likely perceived that job loss would have a worse

impact on their lives than at any other period in recent US history. We contend that it is this

substantial cost of potential job loss that generates a more positive link between job security and

job satisfaction in contractions relative to expansions.

We examine the impact of perceived job security and two objective measures of job

security on worker job satisfaction in the U.S. using difference-in-differences analysis that

controls for differences in covariates across two time periods. We find a positive effect of job

security on job satisfaction in both expansions and contractions, but this effect is significantly

greater during contractionary time periods. Additionally we separate workers by education level

and find that only less-educated workers report a significantly positive impact of job security on

job satisfaction in contractions relative to expansions. Finally we measure the impact of job

security on workers’ intentions to quit and again find that only less-educated workers secure in

their jobs are less-likely to intend to quit in contractions relative to expansions.

Measures of subjective well-being, including job satisfaction, are gaining traction as

important and credible economic variables as Freeman (1978), Borjas (1979), Akerlof et al.

(1988), Krueger and Schkade (2008) and Oswald and Wu (2010) establish. Job satisfaction has

been linked to reduced quits (Akerlof et al., 1988), reduced absenteeism (Punnett et al., 2007)

3  
 
  

and even increased productivity (Mangione and Quinn, 1975). Job satisfaction can be thought of

as a proxy of an individual’s utility derived from working, with a corresponding array of

demographic and job characteristics that determine this on-the-job utility. These include, but are

not limited to, gender (Clark, 1997; Bender et al., 2005), age (Clark et al., 1996), income (Clark

and Oswald, 1996) and union membership (Meng, 1990; Bryson et al., 2004).

One of the most important, and powerful, job characteristics in determining job

satisfaction is job security. Clark (2001) uses the British Household Panel Study to find that job

security is most often cited as the most important job aspect from a list of seven specific job

attributes. Blanchflower and Oswald (1999) use three different cross-sectional data sources to

show that expectations of job loss have the largest negative impact on job satisfaction.

Geishecker (2009) states that perceived job security is one of the most important components of

job satisfaction and Sousa-Poza and Sousa-Poza (2000) find that job security is an important

determinant of job satisfaction across countries.

Another way to measure the importance of job security to workers in contractions and

expansions is to estimate the impact of job security on the likelihood a worker will quit. Here

the worker’s revealed preference to either quit the job or remain at the job is the ultimate

indication of job satisfaction. Clark (2001) uses the British Household Panel Study to show that

job security is largely the most important negative predictor of quit behavior. Arnold and

Feldman (1982) also find that job security influences quit behavior, but also that worker quit

intentions strongly relate to actual quit behavior. Moreover Ashford et al. (1989) model worker

intentions to quit and find that job security significantly reduces quit intentions. In fact

Campbell et al. (2007) find that worker expectations or perceptions of future of job loss are

strong and reliable predictors of actual job loss in the subsequent year, establishing that

4  
 
  

perceived job insecurity is not just a subjective construct of a disgruntled worker, but rather a

materialization of workplace or macroeconomic realities.

Thus we hypothesize that job security is associated with both increased job satisfaction

and reduced quit intentions, but these hypotheses are hardly unique or novel. Our contribution

rests on the notion that these associations are strongest and largest in economic contractions, not

only because workers are more likely to lose their jobs but also because workers are also likely

to find it more difficult to replace a lost job. In particular, our hypothesis suggests that worker

job satisfaction should increase, and quit intentions should decrease, with job security more in

contractions mostly for those workers who have characteristics associated with higher

probabilities of job loss. Perhaps one of the more robust of such characteristics is a lower level

of education.

The rate of job loss for college graduates is 77% of otherwise equivalent high school

graduates (Farber, 2010). Farber (2010) also suggests that the rate of job loss for less educated

workers is more likely to respond to fluctuations in the business cycle than for higher educated

workers. Stewart (2000) replicates this finding using decades of CPS data. Additionally

Royalty (1998) finds that turnover rates are higher among less educated women while Gottschalk

and Moffit (1999) find that duration of non-employment between employment spells is higher

among less educated males. Elsby, Hobijn, and Sahin (2010) find less educated workers

experience steeper rises in joblessness during all recessions, including the Great Recession.

Mukoyama, and Şahin (2006) focus on the heterogeneity in the cost of business cycles among

different groups of people with different skill levels and show that unskilled workers are subject

to a much larger risk of unemployment during recessions than are skilled workers. Finally

Hoynes, Miller and Schaller (2012) find that the impacts of the Great Recession are not uniform

5  
 
  

across demographic groups and have been felt most strongly for workers with low education,

among others. They further argue that these differences are largely explained by variation in

exposure to business cycles across industries and occupations during the Great Recession.  

Less educated workers may be more likely to experience job separations and possibly

longer unemployment spells, but an overall downward trend in job security is extensively

documented by earlier reports and studies. The OECD’s employment outlook (1997) reports that

workers’ perceptions of job security have decreased for most of the OECD countries, while the

2010 and 2011 reports (OECD Employment Outlook 2010 and 2011) also address concerns

about increases in unemployment durations. Additionally a number of studies confirm reduced

job security throughout the late 20th century (Aaronson and Sullivan, 1998; Blanchflower and

Oswald, 1999; Valletta, 1999). More recently Fullerton and Wallace (2007) find that perceived

job security in the United States has declined over the last thirty years.

Although concerns of decreased job security levels persist in the literature, our study is

not necessarily concerned with the overall decline in job security in the US. Rather our findings

first suggest a positive link between job security (perceived and objective proxies) and job

satisfaction and that this link is stronger in economic contractions than in expansions. Second

job security reduces worker intentions to quit in contractions relative to expansions. Finally we

find that these relationships hold true mostly for less-educated workers. In the following

sections we discuss the data and methodology used to test our hypotheses, present the results and

conclude.

2. Identification concerns

Even though studies unambiguously find that job security is positively correlated with job

satisfaction, important concerns surround the identification of the relationship. First the job

6  
 
  

security-job satisfaction relationship is likely endogenous. Theodossiou and Vasileiou (2007)

point out that perhaps it is the high job satisfaction of workers that generate their readiness to

proclaim their jobs are secure, or alternatively it is the low job satisfaction of some workers that

increase their likelihood of future job loss. The authors find in European data that job security is

indeed endogenous in explaining job satisfaction, but after correcting for the bias generated by

this reverse-causality, the positive job security-job satisfaction relationship remains. Geishecker

(2012) uses the German Socio-Economic Panel and suggests that endogeneity is a real problem

in any study of the relationship between perceived job security and subjective well-being

measures, focusing once again on the reverse-causality problem. The author corrects for this

endogeneity and finds the estimated relationship is twice the size of the estimates that ignore the

endogeneity.

Second identification of the relationship between job security and job satisfaction may

suffer from sample selection in that risk-averse workers may self-select into more secure jobs.

Namely relative to the private sector, public sector jobs are more secure (Clark and Postel-Vinay,

2009) and public sector workers are more risk-averse (Bellante and Link, 1981; Pfeifer, 2011)

and sort themselves into public sector jobs (Heywood et al., 2002). As a result of this finding,

Geishecker (2012) and Luechinger et al. (2010) indicate that exogenous variation in perceived

job security can be achieved through public and private sector comparisons.

Yet another, and separate, sample-selection problem stems from the employment choices

and outcomes of people selecting employment (and therefore into our estimation sample) rather

than staying outside of the labor force (and not in our sample), and how these selection criteria

might differ between 1997 and 20084. Namely differences in unobservable worker heterogeneity

                                                                                                                       
4
We thank an anonymous referee for providing this important insight.
7  
 
  

between 1997 and 2008 that are correlated with job satisfaction may determine the employment

outcome (and presence in our sample), potentially causing our model’s results to be biased.

Even though our job satisfaction models include many variables that inform workers’ choices

and ability to gain employment, we cannot guarantee that there is no omitted worker

heterogeneity in our models that are correlated with both employment and job satisfaction. As

we are unfortunately unable to find appropriate exclusion restrictions in our data of wage and

salary workers that would allow us to model employment, we must assume that the same

employment selection process occurs in 1997 and in 2008.

Third there may be omitted variables that are correlated with the error term in job

satisfaction estimations and also with perceived job security. Theodossiou and Vasileiou (2007)

identify this problem as well and employ instrumental variables techniques to control for this

bias. Even after controlling for this form of endogeneity and the other confounding influences

listed above, the positive link between perceived job security and job satisfaction remains. Even

so, the presence of endogeneity and sample selection is a real concern. Although most of the

literature studying the job satisfaction-job security relationship stems from European data, these

issues are more than likely to be present in our U.S. data as well.

We employ several endogeneity correction techniques. First, we isolate only the private

sector and estimate job satisfaction of only those workers who tend to be less risk-averse and are

employed in jobs that engender less perceived job security. This does not control for sample

selection, and especially the selection into or out of employment, but instead permits us to

discuss the job security – job satisfaction relationship for a specific group of workers likely

identified by their preferences (or lack thereof) for job security. Second we substitute objective

proxies of job security, constructed using industries and occupations that are more (or less) likely

8  
 
  

to offer secure jobs, in for the subjective measure of perceived job security. This allows us to

avoid any omitted variables problems we might have that are caused by the subjective natures of

both perceived job security and job satisfaction. It also allows us to correct the problem of

reverse-causality between perceived job security and job satisfaction.

Third, we include ten control variables in our estimations that proxy for personality

characteristics that are perhaps suitable controls for time-invariant individual worker

heterogeneity. Psychological attitudes and preferences towards work, and life, are often

important determinants of job satisfaction, and are able to be controlled for using fixed effects

estimations. However in the absence of longitudinal panel data, Ferrer-i-Carbonell and Frijters

(2004) and Origo and Pagani (2009) contend that including proxies of these personality traits

into the model may serve as an adequate correction for the type of endogeneity that fixed effects

estimations generally control for. Finally job satisfaction and job security may be

simultaneously determined by unobserved worker characteristics, potentially biasing our

estimates of the relationship between job security and job satisfaction in contraction versus

expansion. We apply a two-stage OLS estimation framework in order to further correct for this

potential endogeneity and, following Origo and Pagani (2009), identify as an instrument the

share of workers by gender, education, age and geographic location that are secure in their jobs.

3. Data and Methodology

We use the National Study of the Changing Workforce (NSCW) as it is the only US

dataset to our knowledge to include job satisfaction and perceived job security measures, as well

as a rich set of demographic and job controls commonly found in the job satisfaction literature.

The Families and Work Institute, a non-profit organization, conducts the survey roughly every

five years and the survey structure, layout, style and questions are all very similar and often

9  
 
  

equivalent across waves. Moreover the NSCW includes survey weighting schemes, used

throughout all models in this study, across both waves to more accurately adjust each year’s

sample to that year’s population. For these reasons we believe that two waves of the NSCW,

collected in contrasting periods of economic growth, highlight the variation in worker attitudes

that result from two different periods of the business cycle.

In particular we utilize the private sector sample of the 1997 and 2008 waves of the

NSCW. The 1997 sample was collected between March 14 and July 27, or the second quarter, of

that year when total private sector employment was roughly 102,838,670 according to the

Bureau of Labor Statistics (BLS) Current Employment Statistics (CES). At that time the BLS

Business Employment Dynamics reports that 8,031,000 jobs were gained (7.81%) while

7,446,000 jobs were lost (7.24%). This wave is our representation of an economic expansion.

The 2008 sample of the NSCW was collected between November 12, 2007 and April 20, 2008,

but nearly 90% of all observations were indeed collected in the first quarter of 2008 when total

employment was roughly 115,557,000. In that quarter only 7,234,000 jobs were gained (6.26%)

while 7,449,000 jobs were lost (6.45%), so this wave is our representation of an economic

contraction. These data provide evidence that the labor market was more volatile in 1997 since

proportional gains and losses were 1.55 and 0.79 percentage points higher than in 2008

respectively, indicating that perceived job security may in fact be lower in 1997 (an expansion)

than in 2008 (a contraction)5. We contend it is the fewer job openings in 2008 relative to 1997

                                                                                                                       
5
Indeed 70.1% of private sector workers in 1997 perceive their job to be secure and 71.2% in
2008 perceive their job to be secure.
10  
 
  

that generate the greater importance to workers of having a secure job more so in contractions

than in expansions.6

Our working sample first of all excludes any workers providing incomplete information

about any of our chosen covariates in the model, or those claiming to work less than one hour a

week or earn less than one dollar per hour. We also aim to keep only those workers in the

sample for which job security has similar implications. For instance we exclude self-employed

workers because they are effectively their own bosses, creating a distinctly different concept of

job security. For similar reasons we exclude household workers, agricultural workers and

members of the military.

Finally and perhaps most significantly we exclude government employees from the

sample. These workers do comprise a significant minority of workers, but according to

Heywood et al. (2002), workers with specific characteristics tend to sort themselves into

government jobs, and this sorting generates significant differences in job satisfaction between

public and private sector workers. We contend that this sorting occurs primarily because of the

reduced risk of job loss associated with government jobs, thereby generating a very specific form

of selection bias that would confound our model’s results7. In fact Bellante and Link (1981) find

that public sector workers are indeed more risk-averse than private sector workers. Moreover

public sector employment responds differently to business cycle fluctuations, and is oftentimes

more insulated from such cyclical unemployment. Only private sector employment began its

decline early in 2008, and as a result we simply exclude public sector workers from our model

                                                                                                                       
6
There is also a 2002 NSCW wave, but the job gains (6.85%) during this wave are far greater
than in 2008 (6.26%). Therefore we use the 2008 wave as our contraction sample, rather than
2002.
7
Whole sample estimates of the NSCW data show that 70.5% of private sector workers perceive
their job is secure whereas 81.6% of public sector workers perceive their job is secure.
11  
 
  

and concentrate on only private sector workers8. Our working sample consists of 1849

observations from the 1997 survey and 1620 observations from the 2008 survey. Variable

descriptions, means and standard deviations are presented in Table 19.

Our hypothesis is that economic contractions increase the importance of job security to

workers. As such we use a commonly researched subjective measure as a proxy of how worker

attitudes respond to job security in economic contractions and expansions. This variable is job

satisfaction and it is routinely captured in numerous labor market surveys across several

countries. Job satisfaction is usually a Likert-style variable and in the NSCW it takes on integer

values ranging from 1, indicating workers are very dissatisfied with their jobs, to 4, indicating

workers are very satisfied with their jobs. Normally an ordered probit estimator is used to

estimate job satisfaction, but with non-linear estimators like this, inference regarding the

coefficients of interaction terms is problematic (Ai and Norton, 2003). One fix is to employ the

probit-adapted ordinary least squares procedure (POLS) which rests on the notion that a worker’s

true job satisfaction is a latent continuous measure. Rather than four discrete integer values of

job satisfaction, a transformed POLS version of the ordinal integer job satisfaction variable is a

four-category “pseudo”-continuous variable that can be estimated using OLS (van praag et al.,

2003; van praag and ferrer-i-carbonell, 2006). Each category is the expected value of the latent

continuous job satisfaction variable that occurs between an interval generated by Z-values (of the

standard normal distribution) that are associated with the cumulative relative frequencies of each

category of the ordinal job satisfaction variable (van praag, ferrer I carbonell, 2004; cornellisen,

                                                                                                                       
8
Between November 2007 and April 2008 (contraction sample collection period), the private
sector lost 388,000 jobs whereas the public sector gained 116,000 jobs, according to the BLS.
9
Following Clark and Oswald (1996), our models include both the natural log of hourly wages
as well as a measure for the comparison wage.
12  
 
  

2006). After this transformation we can estimate job satisfaction using OLS and interpret the

estimated interaction term coefficients as marginal effects.

The basic form of our model can be represented by equation (1).

(1) 𝐽𝑆 =   𝛽!! 𝑋 + 𝛽! 𝑆 +  𝜀

where JS is the “pseudo”-continuous job satisfaction measure and X is a matrix consisting of all

the individual controls presented in Table 1. S is the dummy variable that equals 1 when workers

perceive no or little risk of losing their job and 0 otherwise. As the result of an OLS estimation

of JS, 𝛽! reflects the positive association between job security and job satisfaction. As

mentioned previously, we define the observations from the 2008 NSCW sample as occurring

during an economic contraction and those observations from the 1997 NSCW sample as

occurring during a relative economic expansion. The first method we use to test our hypothesis

is to simply compare the 𝛽! in equation (1) when applied to the contraction sample with the 𝛽! in

equation (1) when applied to the expansion sample. If the 𝛽! in the contraction sample is larger

(more positive) than the 𝛽! in the expansion sample, then we might infer that job security

increases job satisfaction more in contractions than in expansions. This approach does not

confirm that the difference is statistically significant though, nor does it control for differences in

covariates between the two samples that may be generating the results. To test for significance

and control for the difference in covariates between the samples we utilize a difference-in-

differences (DD) approach. This method can be articulated as an OLS estimate of equation (2)
10
.

(2) 𝐽𝑆 =   𝛽!! 𝑋 +   𝛽! 𝑆 +   𝛽! 𝐶 +   𝛽! 𝐶×𝑆 +   𝛽!! 𝐶×𝑋 +  𝜀

                                                                                                                       
10
The specification is correct if the difference in 𝛽! ’s from the contraction and expansion
estimations of equation (1) equals 𝛽! in equation (2). This is only true in linear models and not
in non-linear models, providing another reason to use the POLS method.
13  
 
  

C represents a dummy variable that equals 1 for all observations in the contraction (2008) sample

and 0 for all observations in the expansion (1997) sample. Equation (2) shows the interaction of

C with all explanatory variables and we note that 𝛽! is our DD estimate of the relative impact of

job security in economic contractions on job satisfaction.

The measure of job security that we use is identical in wording and placement across both

surveys and the question draws upon worker perceptions of impending job loss: “How likely is it

that during the next couple of years you will lose your present job and have to look for a job with

another employer – very likely, somewhat likely, not too likely or not at all likely?” We

categorize workers with job security as those responding with either “not too likely” or “not at all

likely”. An important concern is that job satisfaction and job security are both subjective

assessments and therefore reliant on and determined by the same unobservable preferences,

characteristics and personal attributes of the survey’s individual respondents. This creates a

potential bias that is difficult to be corrected since we cannot control for these fixed effects in

pooled cross-sectional data. We attempt to control for some of the bias by including proxies that

measure personality traits and that are perhaps time-invariant (Origo and Pagani, 2009), but we

also we use the same DD analysis and include objective proxies of job security rather than the

subjective perceived job security variable itself. In this way we effectively measure the effect of

a more exogenous measure of job security on job satisfaction. We find two suitable proxies by

identifying the industries and occupations most likely to correspond with job security.

First industries’ employment differs in how they respond to contractions. In particular

during the Great Recession some industries fared better than others. For instance, the medical or

professional services industries in 2008 were likely correlated with more job security than the

construction and real estate industries. In 1997 though, we presume that there were far fewer

14  
 
  

differences in which industries were correlated with job security and which were not. As a result

we anticipate that the difference in worker job satisfaction between those in more secure

industries and those in less secure industries was higher during the economic contraction in 2008

than during the economic expansion in 1997. In other words, working in a secure industry has a

larger positive impact on job satisfaction in 2008 than in 1997.

Second occupations differ in how mobile their inhabitants are, or how quickly workers

can switch between jobs within occupation types or perhaps switch occupations entirely.

Machinery operators or laborers, for example, may be locked into a small number of occupations

whereas managers or professionals may have much broader access to more occupations. This

job mobility should matter more in economic contractions, helping to limit exposure to lengthy

unemployment spells for workers. We expect then that the difference in worker job satisfaction

between mobile and less mobile workers is higher in 2008 than in 1997.

Finally we recognize that job satisfaction and job security may still be simultaneously

determined by omitted and unobservable variables. In order to correct for the potential

endogeneity of job security we employ a two-stage OLS estimation procedure (ivreg2 in Stata).

The reduced form equation for job security can be expressed as equation (3) and the structural

equation used to estimate job satisfaction can be expressed as equation (4).

(3) 𝑆 =   𝛿!! 𝑋 + 𝛿! 𝑍 + 𝜇! ,

(4) 𝐽𝑆 =   𝛾! 𝑆 +   𝛾!! 𝑋 +   𝜇!

X is a vector of exogenous explanatory variables; Z is the instrument that is included in the job

security equation and not in the job satisfaction equation, and 𝜇 is the disturbance term. Our

instrument is taken from Origo and Pagani (2009) and is the proportion of workers that are

secure in their jobs by gender, education, age and geographic location; that is, each worker is

15  
 
  

assigned a proportion based on the relative frequency of job security among two categories of

gender and three categories each of education, age and location. Following the two-stage least

squares estimation we test for the exogeneity of S by using a Durbin-Wu-Hausman chi-sq test.

4. Results and Discussion

4.1 Main Results

Security from job loss is a very important component of a worker’s job satisfaction. This

is more likely to be true in economic contractions when replacing a lost job is presumably more

difficult. Table 2 presents five POLS estimates of worker job satisfaction, varying first by the

quantity and type of covariates in the models, and then by the sample of workers included in the

estimations. The results in columns (1) – (3) reflect the whole sample. Workers who perceive

they have a secure job are statistically significantly more likely to report higher job satisfaction

than those that perceive their job is not secure. Also the coefficient representing the indicator for

the economic contraction (2008 NSCW wave) is significant and negative, identifying an overall

decrease in reported job satisfaction in 2008 relative to 1997. This further stresses the

importance of using a DD approach to measure the impact of job security on job satisfaction in

one time period relative to another. The second and third columns add demographic controls and

then job controls successively, yielding little change in the coefficient on job security. After

adding industry, occupation and personality controls in column (4), the coefficient size is

reduced by more than half, but the sign and significance remain almost entirely unchanged

regardless of which controls are in the specification. The final columns in Table 2 split the

sample between separate NSCW waves, representing contraction and expansion. Job security

significantly increases job satisfaction in both periods, but seems to have a stronger impact in the

16  
 
  

contraction sample. It is the difference between these two coefficients that the DD estimator

measures and tests, after controlling for differences in the models’ covariates.

We use a DD estimator to provide a test for significance of the impact of job security in

contraction relative to the impact in expansion. Table 3 presents the results of this procedure

with each cell representing separate POLS job satisfaction estimations. Column (1) first

provides results of simple estimations, expressed in the previous section as equation (1), but with

no controls. This identifies the significant and positive impact job security has on job

satisfaction (𝛽! ) in both contraction (row 1) and expansion (row 2). The estimate in row 3 is the

difference between the impact of job security on job satisfaction in contraction and the impact in

expansion, which is reflected by 𝛽! in equation (2). The difference is significant and positive,

suggesting that job security increases job satisfaction more in contraction than in expansion.

Columns (2) - (4) successively add more controls to the estimations, and while the estimate of 𝛽!

is somewhat reduced in size its impact on job satisfaction remains statistically significant

nonetheless.

The size of the relative impact that job security has on job satisfaction in contractions is

rather large in our estimations. In Table 2 the coefficient on job security is the largest in the

table, even having a more positive impact on job satisfaction than wages or benefits. Taken from

column (4) in Appendix C (the full results corresponding with Table 3), we see that job security

in 2008 relative to 1997 has roughly the same positive impact on job satisfaction as having health

insurance or working for a non-profit organization.

4.2 Alternative specifications

As discussed in Section 2, job security will increase job satisfaction more in contraction

than in expansion mostly for workers with characteristics (such as lower levels of education) that

17  
 
  

are generally correlated with higher probabilities of job loss. Thus we propose that workers with

at most high school degrees (including General Educational Development certificates) will be

more likely to lose their job than those with post-high school education. As a result the job

satisfaction of less educated workers will increase more with job security than the job

satisfaction of more educated workers. Moreover this difference should be larger in

contractions, when the rate of job loss is larger for less educated workers than more educated

workers (Farber, 2010). Columns (2) and (3) in the first row of Table 4 provide DD estimates of

the impact of perceived job security on job satisfaction in contraction relative to expansion, but

separated by education level. Here we see that perceived job security increases job satisfaction

in contraction more so than expansion for workers with high school degrees or less (0.239) more

than workers with higher educations (0.161).

If less educated workers value job security more in contractionary economies, then it is

also likely that these workers, if they perceive their job is secure, would be less likely to quit

their jobs in contraction relative to expansion. The intention of a worker to quit is discovered

through a question in the NSCW asking whether the worker is considering a “genuine search for

a new job with a new employer within a year”. The intention to quit is a binary variable equaling

one if the worker is “very likely” or “somewhat likely” to search for a new job and zero if the

worker is “not at all likely” to search for a new job. Linear probability estimations reveal in

columns (4) through (6) in the first row of Table 4 that only less educated workers exhibit

reduced quit intentions (negative coefficient) when perceiving job security in contraction relative

to expansion. It is the less educated worker rather than the more educated worker that likely has

significantly worse job prospects in contraction relative to expansion. As a result workers with

higher levels of education and in secure jobs may intend to quit no less often in contraction

18  
 
  

relative to expansion, since they may not see their job prospects to be any less dim in economic

contractions.

4.3 Objective job security proxies

Our measures of job security and job satisfaction are subjective perceptions of reality.

Thus any underlying unobservable characteristics that impact a subjective appraisal of job

security may also impact a subjective appraisal of job satisfaction. Unfortunately our data does

not allow us to control for these unobservable characteristics. As an alternative we identify

proxies of job security that are not subjective evaluations by the individual respondents; namely

industries and occupations that correspond objectively and anecdotally with job security11.

First we assume industries less-affected by the contraction that began in December 2007

are more secure, and that jobs in these industries are more likely to thrive, or less likely to

disappear, at the time of the contraction. The breakdowns of industries that we consider to be

more and less secure are displayed in Appendix A. We use gross output by industry from the

Bureau of Economic Analysis to compare the industry growth rates around the expansion sample

(1996 – 1997) and the contraction sample (2007 – 2008). These are also presented in Appendix

A for each industry category12. The average secure industry growth rate between 1996 and 1997

                                                                                                                       
11
Also public sector jobs are often more secure than private sector jobs, so whether or not one
works for the government might be used as our measure for job security – S in equation (2). In
this instance 𝛽! measures the impact of having a public sector job, relative to a private sector job,
on worker job satisfaction in contraction relative to expansion. Since public sector workers are
thought to be more risk-averse, the security of public sector jobs should increase job satisfaction
more in contraction than in expansion (𝛽! is significant and positive). This is indeed the case in
a DD job satisfaction estimation, but should be understood cautiously since, as previously
discussed, government workers are fundamentally different from private sector workers.
12
The industry categories used in the BEA Gross Output by Industry tables do not correspond
perfectly with the 1990 Census codes used to identify industries in the NSCW. As a result we
make some cross-industry assumptions for illustrative purposes. As an additional check we find
that employment gains and losses in the industries broadly reinforce the chosen secure and less
secure designations. These are available from the authors upon request.
19  
 
  

was 4.76% and between 2007 and 2008 the average growth rate was 4.82%. Essentially these

industries grew by the same amount in our contraction and expansion samples. The average

insecure industry growth rate between 1996 and 1997 was 7.44% and between 2007 and 2008 it

was -1.42%. There is a clear difference between our secure and insecure industries and how they

grew at the same rate in 2008 as in 1997 (secure industries) or shrank in 2008 relative to 1997

(insecure industries).

Second we assume that workers in some occupations are more likely to be able to switch

jobs or find another job quicker than others. These more and less mobile occupations are

outlined in Appendix B. Providing objective evidence of mobile and less mobile occupations in

the US around the years we utilize is not straightforward, so here we rely on anecdotes to explain

differences in mobility across occupations. For instance it is likely easier for managers and

professionals to move to a different occupation than for construction workers or machine

operators, especially in light of the circumstances surrounding the contraction that started in

December 2007. Since our chosen groupings of mobile and less mobile occupations are

anecdotal by nature, we test for robustness of the groupings by incrementally switching the

designation of each mobile occupation to less mobile or vice versa, and then re-estimate the

model for every change in occupation classification. The sign and significance of the result

remains the same for every grouping of mobile and less mobile occupations, suggesting that no

single occupation’s mobile or less mobile designation is driving the results.

We duplicate the DD analysis conducted in Table 3 but we substitute our objective job

security proxies in for the subjective perceived job security used in Table 3. Namely in

equations (1) and (2), S now equals 1 if the worker is in a secure industry or mobile occupation

and 0 otherwise. If our DD estimator for each proxy remains positive and significant, then we

20  
 
  

are confident that our analysis using the perceived job security measure is accurate. Rows (2)

and (3) in column (1) of Table 4 display the results from each DD estimate. Working in secure

industries or mobile occupations significantly increases job satisfaction more in contraction than

in expansion, implying again that job security is more valuable to employees in contraction than

in expansion13.

We also apply the industry and occupation proxies to our education sub-samples that

represent workers more and less likely to value job security more in contractions than

expansions. Rows (2) and (3) in columns (2) and (3) of Table 4 show that the job satisfaction of

less-educated workers, more often and in a larger size than more-educated workers, significantly

increases in secure industries and mobile occupations relative to less-secure industries and less-

mobile occupations in contractions more than in expansions. We also apply the same objective

job security proxies to estimations of worker intentions to quit, and these results are reported in

rows (2) and (3) in columns (4) – (6) of Table 4. Only in the less-educated sample are workers

less likely at all to intend to quit in contraction relative to expansion. The significant relationship

between perceived job security and job satisfaction, or intentions to quit, in contraction relative

to expansion may in fact be driven by objective economic occurrences and not necessarily by

individual internal attitudes that simultaneously shape perceived job security and job satisfaction

or intentions to quit.

4.4 Correction for alternative trends

An additional concern lies in the possibility that institutional or macroeconomic factors

that determine job satisfaction and job security, such as labor market regulations, the decline of

                                                                                                                       
13
In order to take into consideration that data points from the same industry / occupation
grouping are potentially subject to the same shocks, we cluster the standard errors by industry /
occupation in these estimations with our objective job security proxies.
21  
 
  

union representation in the private sector, or even the prevalence of workplace computing,

changed between 1997 and 2008. If this is the case, our results may be driven by these other

economic changes and not by the business cycle. We attempt to control for these other potential

factors by taking advantage of the 2002 wave of the NSCW by including it in our DD

estimations and estimating equation (5).

(5) 𝐽𝑆 =   𝛽!! 𝑋 +   𝛽! 𝑆 +   𝛽! 𝐶!" +   𝛽! 𝐶!" + 𝛽! 𝐶!" ×𝑆 +   𝛽! 𝐶!" ×𝑆 +   𝛽!! 𝐶!" ×𝑋 + 𝛽!! 𝐶!" ×𝑋 +  𝜀

where C02 and C08 are the indicators for the 2002 and 2008 NSCW waves, respectively. These

are interacted with every independent variable, including our indicator for job security, and β2

through β6 are reported in Table 5. Even after presumably controlling for changes in these

alternative factors, the coefficient on the interaction between our 2008 contraction and job

security is positive and significant, while the interaction between the 2002 contraction and job

security is positive, but not statistically significantly different from 1997. Moreover, we test the

linear restriction that these two coefficients are equal to each other and we find that, in the fully

specified model, we can reject the null hypothesis that the coefficients on the interactions are

equal. As a result of this admittedly limited control of the alternative trends over time that may

be driving our results, we are more confident that the business cycle does indeed affect how job

security impacts job satisfaction.

4.5 Correcting for endogeneity

We report in Table 5 the results of a two-stage instrumental variables OLS procedure that

aims to correct for the potential simultaneous determination of job satisfaction and job security

by omitted unobservable factors. We include our instrument, share of secure workers by gender,

education, age and location, in the first stage estimation but not in the second. In the first stage

the endogenous indicator of job security is estimated by linear probability while the POLS

22  
 
  

transformed job satisfaction variable is estimated in the second stage. The first two columns of

Table 6 report the results of an instrumental variables regression that excludes the personality

characteristics while the final two columns include them. First, the instrument is a significant

determinant of the endogenous job security indicator, passing the benchmark of an F greater than

10 set by Staiger and Stock (1997). Second, we contend that our instrument likely satisfies the

exclusion restriction (is not correlated with the error term in job satisfaction estimations) since it

is insignificant if included as a control in any of our job satisfaction estimations, and a similar

version is also used as an instrument in Origo and Pagani (2009)14. Third, the coefficients on job

security in the second stage remain positive and statistically significant after correcting for

endogeneity, though they are a bit larger than the original coefficients in Table 2. Finally, the

Durbin-Wu-Hausman chi-sq. test suggests that we should not reject the null hypothesis that the

job security indicator is exogenous in a standard single-stage OLS estimation.

5. Conclusion

Job security is recognized as a very important and highly valued attribute to a worker.

But not all job security can be treated in the same way. We find that in economic contractions

for instance, job security increases worker job satisfaction more than in economic expansions,

since they may fear job loss in a greater capacity as job openings are fewer in contractions than

in expansions. Moreover this result is strongest and most significant among less-educated

workers as they are more likely to suffer job loss in contractions, all else equal. Finally we find

that secure less-educated workers intend to quit their jobs less in contractions relative to

expansions. Since we show that job security increases job satisfaction in times of economic

contractions, and job satisfaction has been linked to increased employee productivity as well as

                                                                                                                       
14
The authors use as an instrument the share of temporary workers by gender, education, age and
country in first stage multinomial logit estimations of contract type.
23  
 
  

reduced employee absenteeism and propensity to quit, we suspect that it is in the interest of

employers to be aware of the relationship between job security and job satisfaction.

There are notable limitations to our methodology including a lack of longitudinal panel

data that could be used to control for fixed effects and for the problem of workers sorting into

more secure jobs based on an unobservable set of preferences. Regardless the results are at least

suggestive of a stronger and more positive association between job satisfaction and job security

in economic contractions relative to expansions. Especially given the recent labor market

turmoil caused by the Great Recession, we provide unique insight that suggests some workers in

this difficult environment may actually be more satisfied with their jobs as a result.

24  
 
  

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28  
 
  

Table 1. Variable descriptions, means and standard deviations

Whole
Contraction Expansion
Sample
Observations 3469 1620 1849
Variable Definitions Mean S.D. Mean S.D. Mean S.D.
Job satisfaction: (4 = highest, 1 = lowest) 3.368 0.693 3.417 0.681 3.326 0.702
Intention to quit: (1 = intend, 0 = does not intend) 0.387 0.487 0.377 0.485 0.396 0.489
Secure job: (1 = secure job, 0 = not secure job) 0.705 0.456 0.708 0.455 0.701 0.458
Non-profit employer 0.165 0.371 0.171 0.377 0.160 0.367
Union member 0.108 0.310 0.102 0.303 0.112 0.316
Medium education: more than HS but not college 0.336 0.472 0.330 0.470 0.341 0.474
High education: college degree or more 0.346 0.476 0.406 0.491 0.294 0.456
Female 0.517 0.500 0.535 0.499 0.501 0.500
Hispanic 0.052 0.221 0.051 0.219 0.052 0.223
Black 0.094 0.291 0.081 0.273 0.105 0.307
Other race: worker is not Black, Hispanic or White 0.080 0.272 0.075 0.263 0.085 0.280
Pension (defined benefit or contribution) 0.517 0.500 0.285 0.451 0.721 0.449
Health insurance: employer provided 0.837 0.369 0.846 0.361 0.830 0.376
Married 0.555 0.497 0.581 0.494 0.532 0.499
Number of children 0.814 1.079 0.776 1.078 0.847 1.078
Tenure (in years): with current employer 7.384 8.014 8.052 8.427 6.799 7.588
Tenure squared 118.7 231.8 135.8 258.8 103.7 204.0
Age 42.06 12.23 45.01 12.10 39.47 11.76
Age squared 1919 1086 2172 1093 1696 1030
Hours worked (weekly) 37.72 8.849 36.70 9.064 38.61 8.559
Log hourly wage* 2.882 0.789 2.976 0.791 2.800 0.779
Comparison wage 2.872 0.432 2.959 0.414 2.796 0.432
Trait 1 0.910 0.286 0.912 0.284 0.909 0.287
Trait 2 0.689 0.463 0.701 0.458 0.678 0.467
Trait 3 0.408 0.492 0.358 0.480 0.453 0.498
Trait 4 0.614 0.487 0.611 0.488 0.617 0.486
Trait 5 0.407 0.491 0.399 0.490 0.413 0.493
Trait 6 0.242 0.428 0.204 0.403 0.276 0.447
Trait 7 0.263 0.441 0.224 0.417 0.298 0.458
Trait 8 0.240 0.427 0.199 0.400 0.275 0.447
Trait 9 0.352 0.478 0.403 0.491 0.307 0.461
Trait 10 35.56 15.93 35.76 16.21 35.39 15.68
*Wages in 1997 adjusted upward for inflation
Samples include 14 occupation categories and 11 industry categories.

29  
 
  

Table 2. Probit-adapted OLS job satisfaction estimations

Whole sample Contraction Expansion

(1) (2) (3) (4) (5) (6)
Secure job 0.546*** 0.539*** 0.530*** 0.244*** 0.348*** 0.172***
(14.759) (14.787) (14.617) (7.242) (6.352) (4.280)
Contraction -0.054 -0.067** -0.070* -0.122*** ----- -----
(-1.616) (-2.054) (-1.915) (-3.654) ----- -----
Medium education ----- -0.072* -0.164*** -0.046 -0.077 -0.019
----- (-1.849) (-4.064) (-1.208) (-1.312) (-0.402)
High education ----- -0.029 -0.252*** -0.069 -0.126 -0.024
----- (-0.741) (-4.979) (-1.238) (-1.404) (-0.356)
Female ----- 0.050 0.124*** 0.023 0.102 -0.048
----- (1.558) (3.263) (0.536) (1.376) (-0.962)
Married ----- 0.065* 0.040 -0.031 -0.002 -0.037
----- (1.843) (1.132) (-1.025) (-0.054) (-0.955)
Number of children ----- 0.051*** 0.049*** 0.050*** 0.049** 0.049***
----- (3.113) (3.024) (3.579) (2.177) (2.845)
Hispanic ----- 0.203*** 0.248*** 0.124* 0.010 0.193**
----- (2.589) (3.153) (1.685) (0.104) (2.108)
Black ----- -0.168*** -0.142** -0.088* -0.133 -0.068
----- (-2.753) (-2.375) (-1.735) (-1.603) (-1.112)
Other race ----- -0.212*** -0.255*** -0.132** -0.030 -0.186**
----- (-3.181) (-3.790) (-2.177) (-0.358) (-2.457)
Age ----- 0.008 -0.003 0.016** 0.007 0.019**
----- (0.763) (-0.248) (2.086) (0.611) (2.119)
Age squared ----- 1.14 x 10-5 1.10 x 10-4 -1.26 x 10-4 1.21x10-5 -1.77x10-4*
----- (0.094) (0.851) (-1.428) (0.101) (-1.782)
Nonprofit employer ----- ----- 0.109** 0.062 0.192** -0.004
----- ----- (2.499) (1.299) (2.576) (-0.067)
Union member ----- ----- -0.058 0.007 -0.024 0.019
----- ----- (-1.160) (0.132) (-0.360) (0.294)
Pension ----- ----- 0.069* 0.045 0.012 0.060
----- ----- (1.757) (1.272) (0.243) (1.220)
Health insurance ----- ----- -0.047 0.136** 0.123 0.143**
----- ----- (-0.859) (2.575) (1.554) (2.132)
Tenure ----- ----- -0.019*** -0.003 0.006 -0.008
----- ----- (-3.245) (-0.444) (0.666) (-1.125)
Tenure squared ----- ----- 0.001*** 2.15x10-4 -2.28x10-4 0.001**
----- ----- (3.046) (1.184) (-0.954) (2.322)
Log wages ----- ----- 0.012 0.018 0.039 0.011
----- ----- (0.478) (0.919) (1.321) (0.450)
Comparison Wage ----- ----- 0.373*** -0.120 -0.056 -0.183
----- ----- (5.247) (-0.960) (-0.259) (-1.281)
Hours worked ----- ----- -0.003 -0.003 -0.001 -0.005*
----- ----- (-1.425) (-1.569) (-0.321) (-1.762)
Personality char. No No No Yes Yes Yes
Industries No No No Yes Yes Yes
Occupations No No No Yes Yes Yes

30  
 
  

Observations 3469 3469 3469 3469 1620 1849

T-statistics are in parentheses and ***, ** and * represent significance at the 1%, 5% and 10% levels,
respectively. Survey weights and estimations are used. Standard errors are linearized.

Table 3. Probit-adapted OLS job satisfaction estimations, difference-in-differences results

(1) (2) (3) (4)

Contraction = 1 0.676*** 0.656*** 0.617*** 0.348***
Observations = 1620 (11.153) (11.282) (10.942) (6.352)
Contraction = 0 0.474*** 0.478*** 0.481*** 0.172***
Observations = 1849 (10.282) (10.334) (10.397) (4.280)
Difference in differences 0.202*** 0.178** 0.136* 0.176***
Observations = 3469 (2.646) (2.397) (1.867) (2.586)
Demographic controls No Yes Yes Yes
Job controls No No Yes Yes
Personality characteristics No No No Yes
Industries No No No Yes
Occupations No No No Yes
Each cell represents the impact of job security on job satisfaction. T-statistics are in parentheses
and ***, ** and * represent statistical significance at the 1%, 5% and 10% levels, respectively.
Survey weights and estimations are used. Standard errors are linearized.

31  
 
  

Table 4. Difference in differences results – Alternative specifications and models

Job satisfaction – POLS Intention to quit – OLS

Whole Lower Higher Whole Lower Higher
sample education education sample education education
(1) (2) (3) (4) (5) (6)
Observations 3,469 1,103 2,366 3,469 1,103 2,366
Perceived job 0.176** 0.239** 0.161** 0.026 -0.076 0.067
(1)
security (2.586) (1.991) (2.173) (0.685) (-1.169) (1.484)
Secure 0.123* 0.165 0.098 -0.034 -0.067 -0.013
(2)
industry proxy (1.873) (1.688) (1.710) (0.763) (-1.000) (-0.274)
Secure occ. 0.292*** 0.349*** 0.203*** 0.023 -0.102* 0.079
(3)
proxy (7.214) (3.967) (3.178) (0.627) (-1.820) (1.507)
T-statistics are in parentheses; ***, ** and * represent statistical significance at the 1%, 5% and
10% levels, respectively. All estimations include demographic, job and personality controls.
Estimations in row (2) omit industry controls and estimations in row (3) omit occupation
controls. Survey weights and estimations are used. Standard errors are clustered by industry in
row 2 and by occupation in row 3.

Table 5: POLS Difference-in-differences specification including NSCW 2002

(1) (2) (3) (4)

Secure job 0.475*** 0.476*** 0.472*** 0.169***
(10.19) (10.19) (10.08) (4.15)
Secure job x 2002 contraction (a) 0.081 0.042 0.035 0.029
(1.06) (0.55) (0.46) (0.47)
Secure job x 2008 contraction (b) 0.200*** 0.179** 0.152** 0.184***
(2.62) (2.41) (2.07) (2.72)
2002 contraction -0.085 0.044 -0.155 -0.412
(-1.24) (0.13) (-0.42) (-1.23)
2008 contraction -0.192*** 0.135 0.011 -0.507
(-2.91) (0.38) (0.03) (-1.32)
Demographic characteristics No Yes Yes Yes
Job characteristics No No Yes Yes
Personality characteristics No No No Yes
Industries No No No Yes
Occupations No No No Yes
Observations 4970 4970 4970 4970
Adjusted Wald Test F {H0: (a) = (b)} 1.91 2.76 2.10 4.71
Adjusted Wald Test P - value 0.168 0.097 0.148 0.030
T-statistics are in parentheses; ***, ** and * represent statistical significance at the 1%, 5% and
10% levels, respectively. All estimations with characteristics include interactions between each
contraction year with each chacteristic.

32  
 
  

Table 6. Instrumental variables POLS regression

IV OLS (1) IV OLS (2)

First stage Second stage First stage Second stage
OLS POLS OLS POLS
Secure job Job Satis. Secure job Job Satis.
Share (instrument) 0.920*** ----- 0.847*** -----
(10.050) ----- (9.566) -----
Secure job ----- 0.689*** ----- 0.391**
----- (3.796) ----- (2.359)
F-Test of excluded instrument 101.00 ----- 91.52 -----
Personality characteristics No No Yes Yes
Durbin-Wu-Hausman chi-sq. test 0.992 0.812
Durbin-Wu-Hausman P-value 0.319 0.368
All specifications include job, demographic, industry and occupation controls. T-statistics are in
parentheses and ***, ** and * represent statistical significance at the 1%, 5% and 10% levels,
respectively. Observations = 3,469.

Appendix A. Secure and less secure industries (1990 Census Codes in parentheses)

% ∆ Gross % ∆ Gross
Secure industries Less secure industries
Output Output
1798 observations 1764 observations
96-97 07-08 96-97 07-08
Mining (40 – 50) 5.83 24.03 Construction (60) 7.28 - 4.39
Nondurable Goods Man. (10 –222) 4.09 6.54 Durable Goods Man. (230 – 392) 7.57 - 2.95
#
Trans.., Comm., Utilities (400–472) 5.00 7.77 Whole. Trade – Dur. (500–532) ----- -----
#
Whole. Trade – Nondur. (540–571) ----- ----- Retail Trade (580 – 691) 3.66 - 3.54
Insurance (711) 4.06 0.38 Finance (700 – 710) * *
7.40 0.06
Personal Services (761 – 791) Real Estate (712)
Entertainment (800 – 810) 5.92* 4.57* * *
Bus. and Repair Services (721 – 760) 11.30 3.71
Prof. and Related Services (812 – 893)
Average Growth Rate in Gross Output $ $ Average Growth Rate in Gross Output
4.77 4.82 7.44 - 1.42
#
In the BEA Gross Output by Industry data wholesale trade is not separated by durable/nondurable goods, so % ∆
Gross Output cannot be measured here.
*
These are labeled differently in the BEA Gross Output tables, so the reported change in gross output is a weighted
average of these groups.
$
We exclude mining from the average growth rate as it is clearly an outlier.

33  
 
  

Appendix B. Mobile and less mobile occupations (1990 Census Codes in parentheses)

Mobile occupations - 2326 observations Less mobile occupations - 1236 observations

Managerial and Professional ( 3 – 106)
Social scientists and workers (166 – 179)
Technicians and Support (203 – 235)
Sales (243 – 285)
Service (413 – 469)
Mechanics and repairers (503 – 549)
Extractive, precision production (613 – 617)
Teachers (113 – 163)
Librarians (164 – 165)
Artists and Athletes (183 – 199)
Clerical workers (303 – 389)
Construction Trades (553 – 599)
Operators, fabricators, laborers (703 – 889)

Appendix C: POLS Differences-in-differences full specifications of Table 3 estimations

(1) (2) (3) (4)

Contraction -0.194*** 0.129 0.115 -0.900
(2.94) (0.37) (0.27) (1.16)
Secure job 0.474*** 0.478*** 0.481*** 0.172***
(10.28) (10.33) (10.40) (4.28)
Contraction x secure job 0.202*** 0.178** 0.136* 0.176***
(2.65) (2.40) (1.87) (2.59)
Medium education ----- -0.018 -0.116** -0.019
----- (0.38) (2.28) (0.40)
High education ----- 0.019 -0.197*** -0.024
----- (0.39) (3.00) (0.36)
Female ----- 0.022 0.108** -0.048
----- (0.53) (2.21) (0.96)
Married ----- 0.084* 0.054 -0.037
----- (1.86) (1.19) (0.96)
Hispanic ----- 0.314*** 0.385*** 0.193**
----- (2.89) (3.53) (2.11)
Black ----- -0.170** -0.148** -0.068
----- (2.31) (2.06) (1.11)
Other race ----- -0.302*** -0.344*** -0.186**
----- (3.47) (3.98) (2.46)
Contraction x Medium Education ----- -0.161** -0.150* -0.059
----- (2.02) (1.83) (0.78)
Contraction x Higher Education ----- -0.142* -0.168* -0.102
----- (1.81) (1.67) (0.91)
Contraction x Female ----- 0.066 0.025 0.150*
----- (1.02) (0.34) (1.68)
Contraction x Married ----- -0.027 -0.018 0.035
----- (0.37) (0.26) (0.58)
Contraction x Hispanic ----- -0.255* -0.328** -0.183
----- (1.66) (2.14) (1.34)
Contraction x Black ----- 0.023 0.024 -0.065

34  
 
  

----- (0.18) (0.19) (0.63)

Contraction x Other race ----- 0.200 0.207 0.156
----- (1.51) (1.57) (1.38)
Age ----- 0.013 0.003 0.019**
----- (1.05) (0.27) (2.12)
Age squared ----- -0.000 0.000 -0.000*
----- (0.43) (0.13) (1.78)
Number of children ----- 0.028 0.031 0.049***
----- (1.36) (1.51) (2.85)
Contraction x age ----- -0.020 -0.027 -0.012
----- (1.17) (1.54) (0.87)
Contraction x age squared ----- 0.000 0.000* 0.000
----- (1.43) (1.87) (1.22)
Contraction x number of children ----- 0.070** 0.064* -0.000
----- (2.10) (1.96) (0.02)
Nonprofit employer ----- ----- 0.029 -0.004
----- ----- (0.51) (0.07)
Union member ----- ----- -0.041 0.019
----- ----- (0.61) (0.29)
Pension ----- ----- 0.066 0.060
----- ----- (1.18) (1.22)
Health insurance ----- ----- -0.058 0.143**
----- ----- (0.80) (2.13)
Contraction x Nonprofit employer ----- ----- 0.260*** 0.196**
----- ----- (3.05) (2.09)
Contraction x Union member ----- ----- -0.052 -0.044
----- ----- (0.53) (0.46)
Contraction x Pension ----- ----- 0.020 -0.048
----- ----- (0.26) (0.70)
Contraction x Health insurance ----- ----- 0.048 -0.020
----- ----- (0.44) (0.19)
Tenure ----- ----- -0.027*** -0.008
----- ----- (3.49) (1.13)
Tenure squared ----- ----- 0.001*** 0.001**
----- ----- (3.80) (2.32)
Log wages ----- ----- -0.004 0.011
----- ----- (0.15) (0.45)
Comparison wage ----- ----- 0.391*** -0.183
----- ----- (4.34) (1.28)
Hours worked ----- ----- -0.004 -0.005*
----- ----- (1.46) (1.76)
Contraction x Tenure ----- ----- 0.016 0.014
----- ----- (1.36) (1.23)
Contraction x Tenure squared ----- ----- -0.001** -0.001**
----- ----- (2.48) (2.33)

35  
 
  

Contraction x Log wages ----- ----- 0.057 0.028

----- ----- (1.13) (0.73)
Contraction x Comparison wage ----- ----- -0.065 0.127
----- ----- (0.47) (0.49)
Contraction x Hours worked ----- ----- 0.003 0.004
----- ----- (0.75) (0.98)
Trait 1 ----- ----- ----- 0.457***
----- ----- ----- (6.55)
Trait 2 ----- ----- ----- 0.626***
----- ----- ----- (14.79)
Trait 3 ----- ----- ----- -0.155***
----- ----- ----- (4.23)
Trait 4 ----- ----- ----- -0.061
----- ----- ----- (1.58)
Trait 5 ----- ----- ----- -0.044
----- ----- ----- (1.21)
Trait 6 ----- ----- ----- 0.009
----- ----- ----- (0.20)
Trait 7 ----- ----- ----- 0.026
----- ----- ----- (0.56)
Trait 8 ----- ----- ----- -0.230***
----- ----- ----- (4.94)
Trait 9 ----- ----- ----- 0.377***
----- ----- ----- (9.46)
Trait 10 ----- ----- ----- 0.002
----- ----- ----- (1.52)
Contraction x Trait 1 ----- ----- ----- -0.001
----- ----- ----- (0.00)
Contraction x Trait 2 ----- ----- ----- -0.002
----- ----- ----- (0.02)
Contraction x Trait 3 ----- ----- ----- 0.075
----- ----- ----- (1.27)
Contraction x Trait 4 ----- ----- ----- 0.078
----- ----- ----- (1.33)
Contraction x Trait 5 ----- ----- ----- 0.124**
----- ----- ----- (2.18)
Contraction x Trait 6 ----- ----- ----- -0.078
----- ----- ----- (0.97)
Contraction x Trait 7 ----- ----- ----- -0.047
----- ----- ----- (0.60)
Contraction x Trait 8 ----- ----- ----- -0.012
----- ----- ----- (0.15)
Contraction x Trait 9 ----- ----- ----- -0.100
----- ----- ----- (1.61)
Contraction x Trait 10 ----- ----- ----- 0.002

36  
 
  

----- ----- ----- (1.24)

Constant -0.327*** -0.779*** -1.326*** -0.737*
(8.24) (3.20) (4.49) (1.72)
Observations 3,469 3,469 3,469 3,469
T-statistics are in parentheses and ***, ** and * represent statistical significance at the 1%, 5%
and 10% levels, respectively.

37  
 

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