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The Effect of Advance Notification of Plant Closings on Unemployment

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  • John T. Addison
  • Pedro Portugal

Abstract

Using data from the 1984 Displaced Worker Survey, the authors model the determinants of time without work following job displacement for a large sample of workers laid off because of plant shutdowns between 1979 and 1984. The major focus of the paper is on the role of advance notification in mitigating unemployment. The estimating procedure accommodates right censored observations stemming from continuing or open-ended spells of unemployment. Advance notification is found to have significantly reduced the duration of unemployment of those notified workers who did not draw unemployment insurance benefits and, in particular, of those who left the plant prior to termination. Advance notice had much less effect on the time without work of notified workers whose spell length of unemployment was long enough for them to collect unemployment insurance benefits.

Suggested Citation

  • John T. Addison & Pedro Portugal, 1987. "The Effect of Advance Notification of Plant Closings on Unemployment," ILR Review, Cornell University, ILR School, vol. 41(1), pages 3-16, October.
  • Handle: RePEc:sae:ilrrev:v:41:y:1987:i:1:p:3-16
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    Cited by:

    1. David M. Gray & Pierre Grenier, 1994. "Fermetures d'usines et durées du chômage : signaux et comportements de recherche d'emploi au Canada," Économie et Prévision, Programme National Persée, vol. 113(2), pages 207-217.
    2. J. Meekes & W.H.J. Hassink, 2016. "The role of the housing market in workers’ resilience to job displacement after firm bankruptcy," Working Papers 16-10, Utrecht School of Economics.
    3. Pfann, Gerard A., 2001. "Options to quit," Economics Letters, Elsevier, vol. 70(2), pages 259-265, February.
    4. Jaap H. Abbring & Gerard J. van den Berg & Pieter A. Gautier & A. Gijsbert C. van Lomwel & Jan C. van Ours & Christopher J. Ruhm, 1998. "Displaced Workers in the United States and the Netherlands," Tinbergen Institute Discussion Papers 98-084/3, Tinbergen Institute.
    5. Schwerdt, Guido, 2011. "Labor turnover before plant closure: "Leaving the sinking ship" vs. "Captain throwing ballast overboard"," Labour Economics, Elsevier, vol. 18(1), pages 93-101, January.
    6. Audra Bowlus & Lars Vilhuber, 2001. "Displaced Workers, Early Leavers, and Re-employment Wages," University of Western Ontario, Centre for Human Capital and Productivity (CHCP) Working Papers 20015, University of Western Ontario, Centre for Human Capital and Productivity (CHCP).
    7. Ruhm, Christopher J, 1994. "Advance Notice, Job Search, and Postdisplacement Earnings," Journal of Labor Economics, University of Chicago Press, vol. 12(1), pages 1-28, January.
    8. Janet Netz & Jon Haveman, 1999. "All In The Family: Family, Income, And Labor Force Attachment," Feminist Economics, Taylor & Francis Journals, vol. 5(3), pages 85-106.
    9. Boman, Anders, 2007. "Does Migration Pay? Earnings effects from geographic mobility following job displacement," Working Papers in Economics 244, University of Gothenburg, Department of Economics, revised 31 Aug 2007.
    10. Irma Mooi-Reci & Ronald Dekker, 2015. "Fixed-Term Contracts: Short-Term Blessings or Long-Term Scars? Empirical Findings from the Netherlands 1980–2000," British Journal of Industrial Relations, London School of Economics, vol. 53(1), pages 112-135, March.
    11. Patricia Beeson & Fredrick Tannery, 2004. "The Impact of Industrial Restructuring on Earnings Inequality: The Decline of Steel and Earnings in Pittsburgh," Growth and Change, Wiley Blackwell, vol. 35(1), pages 21-41, February.
    12. Meekes, Jordy & Hassink, Wolter, 2017. "The Role of the Housing Market in Workers' Resilience to Job Displacement after Firm Bankruptcy," IZA Discussion Papers 10894, Institute of Labor Economics (IZA).
    13. Roberto Pedace & Stephanie Rohn, 2011. "The Impact of Minimum Wages on Unemployment Duration: Estimating the Effects Using the Displaced Worker Survey," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 50(1), pages 57-75, January.
    14. Carrington, William J & Zaman, Asad, 1994. "Interindustry Variation in the Costs of Job Displacement," Journal of Labor Economics, University of Chicago Press, vol. 12(2), pages 243-275, April.
    15. Seim, David, 2019. "On the incidence and effects of job displacement: Evidence from Sweden," Labour Economics, Elsevier, vol. 57(C), pages 131-145.
    16. Anders Boman, 2011. "Does migration pay? Earnings effects of geographic mobility following job displacement," Journal of Population Economics, Springer;European Society for Population Economics, vol. 24(4), pages 1369-1384, October.
    17. Daniel S. Hamermesh, 1986. "The Demand for Workers and Hours and the Effects of Job Security Policies: Theory and Evidence," NBER Working Papers 2056, National Bureau of Economic Research, Inc.
    18. Jones, Stephen R G & Kuhn, Peter, 1995. "Mandatory Notice and Unemployment," Journal of Labor Economics, University of Chicago Press, vol. 13(4), pages 599-622, October.
    19. Meekes, Jordy & Hassink, Wolter H.J., 2019. "The role of the housing market in workers′ resilience to job displacement after firm bankruptcy," Journal of Urban Economics, Elsevier, vol. 109(C), pages 41-65.

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