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Not in my Community: Social Pressure and the Geography of Dismissals

Listed author(s):
  • Eve Caroli

    ()

    (LEDa - Laboratoire d'Economie de Dauphine - Université Paris-Dauphine, Legos - Laboratoire d'Economie et de Gestion des Organisations de Santé - Université Paris-Dauphine, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics)

  • Giorgio Brunello

    (Dipartimento di Economia "Marco Fanno" - Universita degli Studi di Padova, dipartimento di scienze economiche - Universita degli Studi di Padova)

  • Andrea Bassanini

    (OECD - OECD, OCDE - Organisation de coopération et de développement économiques - Organisation de Coopération et de Développement Economiques)

We investigate the impact of local social pressure on firms' firing decisions. Using linked employer-employee data, we show that secondary establishments located further away from headquarters have higher dismissal rates than those located closer. The effect of distance on dismissals is stronger, the greater the visibility of the firm in the local community of its headquarters and the larger the degree of selfishness of that community. We show that these findings can be explained by the social pressure exerted by the communities where firms' headquarters are located, which induces CEOs to refrain from dismissing at short distance from their headquarters.

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Paper provided by HAL in its series Post-Print with number hal-01347254.

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Date of creation: 2017
Publication status: Published in Journal of Labor Economics, 2017, 35 (2)
Handle: RePEc:hal:journl:hal-01347254
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-01347254
Contact details of provider: Web page: https://hal.archives-ouvertes.fr/

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