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The mobility of displaced workers: How the local industry mix affects job search

Author

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  • Neffke, Frank M.H.
  • Otto, Anne
  • Hidalgo, César

Abstract

Are there Marshallian externalities in job search? We study how workers who lose their jobs in establishment closures in Germany cope with their loss of employment. About a fifth of these displaced workers do not return to social-security covered employment within the next three years. Among those who do get re-employed, about two-thirds leave their old industry and one-third move out of their region. However, which of these two types of mobility responses workers will choose depends on the local industry mix in ways that are suggestive of Marshallian benefits to job search. In particular, large concentrations of one’s old industry makes it easier to find new jobs: in regions where the pre-displacement industry is large, displaced workers suffer relatively small earnings losses and find new work faster. In contrast, large local industries skill-related to the pre-displacement industry increase earnings losses but also protect against long-term unemployment. Analyzed through the lens of a job-search model, the exact spatial and industrial job-switching patterns reveal that workers take these Marshallian externalities into account when deciding how to allocate search efforts among industries.

Suggested Citation

  • Neffke, Frank M.H. & Otto, Anne & Hidalgo, César, 2018. "The mobility of displaced workers: How the local industry mix affects job search," Journal of Urban Economics, Elsevier, vol. 108(C), pages 124-140.
    • Handle: RePEc:eee:juecon:v:108:y:2018:i:c:p:124-140
    DOI: 10.1016/j.jue.2018.09.006
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    Cited by:

    1. Peter Haller & Daniel F. Heuermann, 2020. "Opportunities and competition in thick labor markets: Evidence from plant closures," Journal of Regional Science, Wiley Blackwell, vol. 60(2), pages 273-295, March.
    2. Roberto Antonietti & Ron Boschma, 2021. "Social capital, resilience, and regional diversification in Italy [Social capital, innovation and growth: evidence from Europe]," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 30(3), pages 762-777.
    3. Arntz, Melanie & Ivanov, Boris & Pohlan, Laura, 2022. "Regional Structural Change and the Effects of Job Loss," IZA Discussion Papers 15313, Institute of Labor Economics (IZA).
    4. Philipp vom Berge & Achim Schmillen, 2023. "Effects of mass layoffs on local employment—evidence from geo-referenced data," Journal of International Economic Law, Oxford University Press, vol. 23(3), pages 509-539.
    5. Rosalia Castellano & Gaetano Musella & Gennaro Punzo, 2023. "Does context matter? Exploring the effects of productive structures on the relationship between innovation and workforce skills’ complementarity," Quality & Quantity: International Journal of Methodology, Springer, vol. 57(3), pages 1991-2011, June.
    6. Vinko Muštra & Blanka Škrabić Perić & Smiljana Pivčević, 2023. "Cultural heritage sites, tourism and regional economic resilience," Papers in Regional Science, Wiley Blackwell, vol. 102(3), pages 465-482, June.
    7. Philipp vom Berge & Achim Schmillen, 2023. "Effects of mass layoffs on local employment—evidence from geo-referenced data," Journal of Economic Geography, Oxford University Press, vol. 23(3), pages 509-539.
    8. Orsa Kekezi & Ron Boschma, 2021. "Returns to migration after job loss—The importance of job match," Environment and Planning A, , vol. 53(6), pages 1565-1587, September.
    9. Jordy Meekes & Wolter H. J. Hassink, 2023. "Endogenous local labour markets, regional aggregation and agglomeration economies," Regional Studies, Taylor & Francis Journals, vol. 57(1), pages 13-25, January.
    10. Viviana Celli & Augusto Cerqua & Guido Pellegrini, 2023. "The long-term effects of mass layoffs: do local economies (ever) recover?," Journal of Economic Geography, Oxford University Press, vol. 23(5), pages 1121-1144.
    11. Charlie Joyez & Raja Kali & Catherine Laffineur, 2023. "Occupational Coherence and Local Labor Market Performance: Evidence from France," GREDEG Working Papers 2023-20, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    12. David C. Maré & Richard Fabling & Dean R. Hyslop, 2023. "Job displacement and local employment density," Working Papers 23_12, Motu Economic and Public Policy Research.
    13. Osborne Jackson, 2021. "Job Displacement and Sectoral Mobility," Working Papers 21-19, Federal Reserve Bank of Boston.
    14. Vasilios D. Kosteas, 2020. "Occupational concentration and outcomes for displaced workers," Papers in Regional Science, Wiley Blackwell, vol. 99(4), pages 977-997, August.
    15. Claudia Macaluso, 2023. "Skill Remoteness and Post-Layoff Labor Market Outcomes," CESifo Working Paper Series 10845, CESifo.
    16. Ron Boschma & Riccardo Cappelli & Anet Weterings, 2017. "Labour mobility, skill-relatedness and plant survival over the industry life cycle: Evidence from new Dutch plants," Papers in Evolutionary Economic Geography (PEEG) 1731, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Dec 2017.
    17. Maczulskij, Terhi & Böckerman, Petri, 2019. "Losing a Job and (Dis)incentives to Move," ETLA Working Papers 75, The Research Institute of the Finnish Economy.

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