We analyze the full distribution of displaced workers’ earnings losses using a new method that
combines matching and synthetic control group approaches at the individual level. We find that the
distribution of earnings losses is highly skewed. Average losses, as estimated by conventional event
studies, are driven by a small number of workers who suffer catastrophic losses, while most recover
quickly. Observable worker characteristics explain only a small fraction of the variance in
earnings losses. Instead, we find substantial heterogeneity in earnings losses even among workers
displaced by the same firm who have identical observed characteristics such as education, age, and
gender. Workers with minimal earnings losses adjust quickly by switching industries, occupations,
and especially regions, while comparable workers with catastrophic losses adjust slowly, even
though they are forced to make comparable numbers of switches in the long run.