J Labor Res (2012) 33:337–352 DOI 10.1007/s12122-012-9136-y Short Term Gain, Long Term Pain Informal Job Search Methods and Post-Displacement Outcomes Colin P. Green Published online: 19 February 2012 © Springer Science+Business Media, LLC 2012 Abstract This paper examines the role of informal job search methods on the labour market outcomes of displaced workers. Informal job search methods could alleviate short-term labour market difficulties of displaced workers by providing information on job opportunities, allowing them to signal their productivity and may mitigate wage losses through better post-displacement job matching. However if displacement results from reductions in demand for specific sectors/skills, the use of informal job search methods may increase the risk of job instability. While informal job search methods are associated with lower wage losses, they lead to increased job instability and increased risk of subsequent job displacement. Keywords Job displacement · Search methods · Job security JEL Classification J29 · J45 · M54 Introduction The sizeable individual welfare losses associated with worker displacement are well documented. For instance, displaced workers experience difficulties with re-employment, and after re-employment are often underemployed and face significant wage reductions (Podgursky and Swaim 1987; Kletzer 1989; Farber 1993; Jacobson et al. 1993; Burda and Mertens 2001). In addition, the experience of displacement is associated with ongoing job instability (Stevens 1997), and there is evidence displacement has negative intergenerational C. P. Green (B ) Lancaster University, Lancaster LA14YT, UK e-mail: c.p.green@lancaster.ac.uk