IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

The Efficiency and Productivity Implications of Corporate Layoffs

Listed author(s):
  • M Raj
  • M Forsyth
Registered author(s):

    This paper examines the impact of corporate layoffs on firm efficiency levels. The methodology used provides fresh insights into the effects of layoffs on firm and labour-force performance. This paper uses a data envelopment analysis (DEA) approach to provide a benchmark measure for the operating efficiency of restructured companies that have reduced staff numbers and also companies that have found it necessary to downsize due to declining demand for its product. We apply this linear programming technique to both pre- and post-layoff periods. The findings indicate the sample of companies that restructure and incorporate layoffs as part of the process find an increase in efficiency while the opposite is found for firms that find it necessary to cut staff due to declining performance. The study also examines the relation between layoffs and shareholder wealth. The findings show that layoffs attributed to declining demand are related with poor stock market performance in the long-term post-layoff period. The evidence also suggests that firms involved in reorganisation, and subsequently layoffs, perform strongly and are viewed positively by the market over the 2-year post-layoff period.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    Download Restriction: no

    Article provided by Economic Issues in its journal Economic Issues.

    Volume (Year): 7 (2002)
    Issue (Month): 2 (September)
    Pages: 59-70

    in new window

    Handle: RePEc:eis:articl:202raj
    Contact details of provider: Postal:
    Burton Street, Nottingham, NG1 4BU

    Web page:

    More information through EDIRC

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:eis:articl:202raj. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dan Wheatley)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.