Workforce Reorganization and the Worker

In this paper we study the joint decision process of changing the structure of jobs and layingoff individual workers in a firm that downsizes its workforce. A hierarchical decision model isproposed and estimated using personnel data from a firm in demise comparing thecharacteristics of the individual workers and the structure of the firm’s labour force before andafter its reorganization. Our results show that workers in jobs in the top levels of each skillgroup’s hierarchy are better protected against downsizing due to larger productivity shocksand larger firing costs...