IDEAS home Printed from https://ideas.repec.org/a/oup/jecgeo/v23y2023i3p509-539..html
   My bibliography  Save this article

Effects of mass layoffs on local employment—evidence from geo-referenced data

Author

Listed:
  • Philipp vom Berge
  • Achim Schmillen

Abstract

Using an event study approach and a novel data set that links administrative information on German establishments with exact distance measures from geo-referenced address data, we analyze the net impact of mass layoffs on local employment. We find that local spillovers significantly attenuate the direct impact of mass layoffs on municipal-level employment. About a quarter of the 1-year direct employment loss due to a mass layoff event is absorbed within the same municipality. Local spillovers are especially pronounced very close to the mass layoff site; the majority of the absorption is concentrated within a 1000-m radius. There is little evidence of spillovers beyond the affected municipality.

Suggested Citation

  • 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.
    • Handle: RePEc:oup:jecgeo:v:23:y:2023:i:3:p:509-539.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/jeg/lbac026
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. David Card & Ana Rute Cardoso & Joerg Heining & Patrick Kline, 2018. "Firms and Labor Market Inequality: Evidence and Some Theory," Journal of Labor Economics, University of Chicago Press, vol. 36(S1), pages 13-70.
    2. Patrick Kline & Enrico Moretti, 2014. "People, Places, and Public Policy: Some Simple Welfare Economics of Local Economic Development Programs," Annual Review of Economics, Annual Reviews, vol. 6(1), pages 629-662, August.
    3. Emilia Del Bono & Andrea Weber & Rudolf Winter-Ebmer, 2012. "Clash Of Career And Family: Fertility Decisions After Job Displacement," Journal of the European Economic Association, European Economic Association, vol. 10(4), pages 659-683, August.
    4. Browning, Martin & Heinesen, Eskil, 2012. "Effect of job loss due to plant closure on mortality and hospitalization," Journal of Health Economics, Elsevier, vol. 31(4), pages 599-616.
    5. Gabriel M. Ahlfeldt & Stephen J. Redding & Daniel M. Sturm & Nikolaus Wolf, 2015. "The Economics of Density: Evidence From the Berlin Wall," Econometrica, Econometric Society, vol. 83, pages 2127-2189, November.
    6. Jacobson, Louis S & LaLonde, Robert J & Sullivan, Daniel G, 1993. "Earnings Losses of Displaced Workers," American Economic Review, American Economic Association, vol. 83(4), pages 685-709, September.
    7. Kenneth A. Couch & Dana W. Placzek, 2010. "Earnings Losses of Displaced Workers Revisited," American Economic Review, American Economic Association, vol. 100(1), pages 572-589, March.
    8. Wolfgang Dauth & Sebastian Findeisen & Jens Suedekum, 2017. "Trade and Manufacturing Jobs in Germany," American Economic Review, American Economic Association, vol. 107(5), pages 337-342, May.
    9. Louis S. Jacobson & Robert J. LaLonde & Daniel G. Sullivan, 1993. "Long-term earnings losses of high-seniority displaced workers," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 17(Nov), pages 2-20.
    10. Boris Hirsch & Elke J. Jahn & Alan Manning & Michael Oberfichtner, 2022. "The Urban Wage Premium in Imperfect Labor Markets," Journal of Human Resources, University of Wisconsin Press, vol. 57(S), pages 111-136.
    11. Iacus, Stefano & King, Gary & Porro, Giuseppe, 2009. "cem: Software for Coarsened Exact Matching," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 30(i09).
    12. Michael Greenstone & Richard Hornbeck & Enrico Moretti, 2010. "Identifying Agglomeration Spillovers: Evidence from Winners and Losers of Large Plant Openings," Journal of Political Economy, University of Chicago Press, vol. 118(3), pages 536-598, June.
    13. Browning, Martin & Crossley, Thomas F., 2008. "The long-run cost of job loss as measured by consumption changes," Journal of Econometrics, Elsevier, vol. 145(1-2), pages 109-120, July.
    14. Faggio, Giulia, 2019. "Relocation of public sector workers: Evaluating a place-based policy," Journal of Urban Economics, Elsevier, vol. 111(C), pages 53-75.
    15. Jordi Jofre-Monseny & Maria Sánchez-Vidal & Elisabet Viladecans-Marsal, 2018. "Big plant closures and local employment," Journal of Economic Geography, Oxford University Press, vol. 18(1), pages 163-186.
    16. J. Bradford Jensen & Lori G. Kletzer, 2010. "Measuring Tradable Services and the Task Content of Offshorable Services Jobs," NBER Chapters, in: Labor in the New Economy, pages 309-335, National Bureau of Economic Research, Inc.
    17. Tanja Hethey-Maier & Johannes F. Schmieder, 2013. "Does the Use of Worker Flows Improve the Analysis of Establishment Turnover? Evidence from German Administrative Data," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 133(4), pages 477-510.
    18. Ben Zou, 2018. "The Local Economic Impacts of Military Personnel," Journal of Labor Economics, University of Chicago Press, vol. 36(3), pages 589-621.
    19. Matthew Blackwell & Stefano Iacus & Gary King & Giuseppe Porro, 2009. "cem: Coarsened exact matching in Stata," Stata Journal, StataCorp LP, vol. 9(4), pages 524-546, December.
    20. David H. Autor & David Dorn & Gordon H. Hanson, 2015. "Untangling Trade and Technology: Evidence from Local Labour Markets," Economic Journal, Royal Economic Society, vol. 0(584), pages 621-646, May.
    21. Mohammad Arzaghi & J. Vernon Henderson, 2008. "Networking off Madison Avenue," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 75(4), pages 1011-1038.
    22. Ben Jann, 2017. "Why propensity scores should be used for matching," German Stata Users' Group Meetings 2017 01, Stata Users Group.
    23. Christina Gathmann & Ines Helm & Uta Schönberg, 2020. "Correction to: Spillover Effects of Mass Layoffs," Journal of the European Economic Association, European Economic Association, vol. 18(1), pages 540-540.
    24. Matias Busso & Jesse Gregory & Patrick Kline, 2013. "Assessing the Incidence and Efficiency of a Prominent Place Based Policy," American Economic Review, American Economic Association, vol. 103(2), pages 897-947, April.
    25. 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.
    26. Christina Gathmann & Ines Helm & Uta Schönberg, 2020. "Spillover Effects of Mass Layoffs," Journal of the European Economic Association, European Economic Association, vol. 18(1), pages 427-468.
    27. Ruhm, Christopher J, 1991. "Are Workers Permanently Scarred by Job Displacements?," American Economic Review, American Economic Association, vol. 81(1), pages 319-324, March.
    28. Stuart S. Rosenthal & William C. Strange, 2020. "How Close Is Close? The Spatial Reach of Agglomeration Economies," Journal of Economic Perspectives, American Economic Association, vol. 34(3), pages 27-49, Summer.
    29. Rosenthal, Stuart S. & Strange, William C., 2008. "The attenuation of human capital spillovers," Journal of Urban Economics, Elsevier, vol. 64(2), pages 373-389, September.
    30. King, Gary & Nielsen, Richard, 2019. "Why Propensity Scores Should Not Be Used for Matching," Political Analysis, Cambridge University Press, vol. 27(4), pages 435-454, October.
    31. Neumark, David & Kolko, Jed, 2010. "Do enterprise zones create jobs? Evidence from California's enterprise zone program," Journal of Urban Economics, Elsevier, vol. 68(1), pages 1-19, July.
    32. Giulia Faggio & Teresa Schlüter & Philipp vom Berge, 2018. "Interaction of Public and Private Employment: Evidence from a German Government Move," SERC Discussion Papers 0229, Centre for Economic Performance, LSE.
    33. Iacus, Stefano M. & King, Gary & Porro, Giuseppe, 2012. "Causal Inference without Balance Checking: Coarsened Exact Matching," Political Analysis, Cambridge University Press, vol. 20(1), pages 1-24, January.
    34. Andrew Foote & Michel Grosz & Ann Stevens, 2019. "Locate Your Nearest Exit: Mass Layoffs and Local Labor Market Response," ILR Review, Cornell University, ILR School, vol. 72(1), pages 101-126, January.
    35. Matthew J. Notowidigdo, 2020. "The Incidence of Local Labor Demand Shocks," Journal of Labor Economics, University of Chicago Press, vol. 38(3), pages 687-725.
    36. Achim Schmillen, 2013. "Are wages equal across sectors of production?," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 21(4), pages 655-682, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Axelle Arquié & Thomas Grjebine, 2024. "Are Mass Layoffs Individually Costly But Socially Beneficial?," Working Papers 2024-03, CEPII research center.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. Vom Berge, Philipp & Schmillen, Achim, 2015. "Direct and indirect effects of mass layoffs : evidence from geo-referenced data," IAB-Discussion Paper 201511, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    3. 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.
    4. Gathmann, Christina & Helm, Ines & Schönberg, Uta, 2014. "Spillover Effects in Local Labor Markets: Evidence from Mass Layoffs," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100378, Verein für Socialpolitik / German Economic Association.
    5. 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.
    6. Achim D. Schmillen, 2020. "Causes and Impacts of Job Displacements and Public Policy Responses," World Bank Publications - Reports 33720, The World Bank Group.
    7. Léa Toulemon, 2016. "Job quality, health insurance and the price of medical products : essays in applied economics [Qualité de l'emploi, assurance santé et prix des médicaments à l'hôpital : essais en économie appliqué," SciencePo Working papers Main tel-03455279, HAL.
    8. repec:hal:spmain:info:hdl:2441/3018m4nhj18vvr47bolsnnqeqs is not listed on IDEAS
    9. Lerche, Adrian, 2022. "Investment Tax Credits and the Response of Firms," IZA Discussion Papers 15668, Institute of Labor Economics (IZA).
    10. Hwanoong Lee & Changsu Ko & Wookun Kim, 2023. "Local Employment Multiplier: Evidence from Relocation of Public-Sector Entities in South Korea," CESifo Working Paper Series 10870, CESifo.
    11. 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.
    12. Gathmann, Christina & Huttunen, Kristiina & Jernström, Laura & Sääksvuori, Lauri & Stitzing, Robin, 2020. "In Sickness and in Health: Job Displacement and Health. Spillovers in Couples," Working Papers 133, VATT Institute for Economic Research.
    13. Kristian Behrens & Manassé Drabo & Florian Mayneris, 2021. "Cultural and public services as factors of city resilience ? Evidence from big plant closures and downsizing," CIRANO Working Papers 2021s-41, CIRANO.
    14. Faggio, G. & Schluter, T. & vom Berge, P., 2019. "Interaction of Public and Private Employment: Evidence from a German Government Move," Working Papers 19/09, Department of Economics, City University London.
    15. Theodoropoulos, Nikolaos & Voucharas, Georgios, 2023. "Firm Closures and Labor Market Policies in Europe: Evidence from Retrospective Longitudinal Data," GLO Discussion Paper Series 1288, Global Labor Organization (GLO).
    16. Ramboer, Sander & Reynaerts, Jo, 2020. "Indecent proposals: Estimating the impact of regional state aid through EU guideline compliance," Regional Science and Urban Economics, Elsevier, vol. 82(C).
    17. 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.
    18. Léa Toulemon & Lexane Weber-Baghdiguian, 2016. "Long-term Impact of Job Displacement on Job Quality and Satisfaction: Evidence from Germany," SciencePo Working papers Main halshs-01418183, HAL.
    19. Léa Toulemon & Lexane Weber-Baghdiguian, 2016. "Long-term Impact of Job Displacement on Job Quality and Satisfaction: Evidence from Germany," SciencePo Working papers halshs-01418183, HAL.
    20. Blakeslee, David & Chaurey, Ritam & Fishman, Ram & Malik, Samreen, 2018. "Structural Transformation and Spillovers from Industrial Areas," IZA Discussion Papers 11886, Institute of Labor Economics (IZA).
    21. Léa Toulemon, 2016. "Job quality, Health Insurance and the Price of Medical Products: Essays in Applied Economics," Sciences Po publications info:hdl:2441/3018m4nhj18, Sciences Po.

    More about this item

    Keywords

    Mass layoffs; local spillovers; geo-referenced data;
    All these keywords.

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:jecgeo:v:23:y:2023:i:3:p:509-539.. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://academic.oup.com/joeg .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.