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In the first part of this essay, I summarize the job displacement literature and provide a theoretical motivation that allows for labor market conditions to affect the signal associated with job loss. The theoretical model predicts that a weaker signal is provided regarding worker quality when many layoffs occur.

Next, the essay contains several tests that examine whether the conditions surrounding a job loss affect post-displacement wages. I first utilize the Displaced Worker Survey and estimate that layoffs have larger post-displacement wage costs for male workers, as compared to plant closings. I also find that male, white-collar workers would face lower costs associated with displacement if the local unemployment rate were to increase, suggesting that the informative value of layoffs depends upon the market conditions under which the layoff occurs. As an additional empirical test, I investigate the stigma effect of layoffs using data from the National Longitudinal Survey of Youth using two different approaches. The second approach explicitly m odels the market's interpretation of the conditions surrounding a layoff, and allows for the examination of multiple job. My results provide evidence that labor market conditions affect the stigma associated with layoffs for a sample of male workers, using both approaches. I conclude the essay with a discussion of policy implications.