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Lingering illness or sudden death? Pre-exit employment developments in German establishments

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  • Daniel Fackler
  • Claus Schnabel
  • Joachim Wagner

Abstract

Using a large administrative data set for Germany, this article compares employment developments in exiting and surviving establishments. Applying a matching approach, we find a clear "shadow of death" effect reflecting lingering illness: in both West and East Germany establishments shrink dramatically already several years before closure, employment growth rates differ strongly between exiting and surviving establishments, and this difference becomes stronger as exit approaches. Moreover, we provide first evidence that prior to exit the workforce becomes on average more skilled, more female, and older in exiting compared to surviving establishments. These effects are more clearly visible in West than in East Germany.

Suggested Citation

  • Daniel Fackler & Claus Schnabel & Joachim Wagner, 2014. "Lingering illness or sudden death? Pre-exit employment developments in German establishments," Industrial and Corporate Change, Oxford University Press, vol. 23(4), pages 1121-1140.
    • Handle: RePEc:oup:indcch:v:23:y:2014:i:4:p:1121-1140.
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    Cited by:

    1. Fackler, Daniel & Müller, Steffen & Stegmaier, Jens, 2016. "Plant-level employment development before collective displacements: Comparing mass layoffs, plant closures, and bankruptcies," IWH Discussion Papers 27/2016, Halle Institute for Economic Research (IWH).
    2. Michaela Fuchs & Antje Weyh, 2014. "The pre-exit performance of German plants - How long is the 'shadow of death'?," ERSA conference papers ersa14p1644, European Regional Science Association.

    More about this item

    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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