Post-Dismissal Trajectories and Challenges to Professional Relocation in the Brazilian Labor Market

Author: Valdemar Pinho Neto, Leandro da Rocha, Mônica Bahia, Paulo Tafner e Sérgio Guimarães

Edition: 1st

Published in: May 2025

The Technical Note “Post-Dismissal Trajectories and Challenges to Professional Relocation in the Brazilian Labor Market” analyzes the impacts of mass layoffs on the employability and income of formal workers in Brazil. The study uses administrative data from RAIS between 2004 and 2019 and adopts an event study design to identify the long-term effects of layoffs, focusing on differentiation by sector and size of firms.

The results indicate that dismissed workers face persistent wage losses and are less likely to re-enter the formal market, especially when they come from smaller firms or sectors such as manufacturing and trade. Even among those who get a new job, salaries are, on average, lower than those received before the dismissal.

The analysis shows that the size of the firm and the sector of operation play a crucial role in the resilience of workers in the face of dismissal shocks, highlighting the importance of public policies that consider these heterogeneities. Measures such as professional retraining and stimulating mobility to more dynamic sectors can contribute to reducing the length of unemployment and mitigating the negative effects of layoffs.