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Industry shutdown rates and permanent layoffs: evidence from firm-worker matched data

Author

Listed:
  • Kim Huynh
  • Yuri Ostrovsky
  • Robert Petrunia
  • Marcel Voia

    (University of Ottawa [Ottawa])

Abstract

Firm shutdown creates a turbulent situation for workers as it leads directly to layoffs for its workers. An additional consideration is whether a firm's shutdown within an industry creates turbulence for workers at other continuing firms. Using data drawn from the Longitudinal Worker File, a Canadian firm-worker matched employment database, we investigate the impact of industry shutdown rates on workers at continuing firm. This paper exploits variation in shutdown rates across industries and within an industry over time to explain the rate of permanent layoffs and the growth of workers' earnings. We find an increase in industry shutdown rates increases the probability of permanent layoffs and decreases earnings growth for workers at continuing firms.

Suggested Citation

  • Kim Huynh & Yuri Ostrovsky & Robert Petrunia & Marcel Voia, 2017. "Industry shutdown rates and permanent layoffs: evidence from firm-worker matched data," Post-Print hal-03573064, HAL.
    • Handle: RePEc:hal:journl:hal-03573064
    DOI: 10.1186/s40172-017-0057-0
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    Cited by:

    1. Uguccioni, James, 2022. "The long-run effects of parental unemployment in childhood," CLEF Working Paper Series 45, Canadian Labour Economics Forum (CLEF), University of Waterloo.
    2. Maxime Menuet & Patrick Villieu & Marcel Voia, 2021. "Does public debt secure social peace? A diversionary theory of public debt management," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 57(3), pages 475-501, October.
    3. Povilas Lastauskas, 2022. "Lockdown, employment adjustment, and financial frictions," Small Business Economics, Springer, vol. 58(2), pages 919-942, February.
    4. Anja Deelen & Marloes de Graaf-Zijl & Wiljan van den Berge, 2018. "Labour market effects of job displacement for prime-age and older workers," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 7(1), pages 1-30, December.
    5. Gustavo Canavire-Bacarreza & Luis C. Carvajal-Osorio, 2020. "Two Stories of Wage Dynamics in Latin America: Different Policies, Different Outcomes," Journal of Labor Research, Springer, vol. 41(1), pages 128-168, June.
    6. Choi, Sangyup & Furceri, Davide & Yoo, Seung Yong, 2024. "Heterogeneity in the effects of uncertainty shocks on labor market dynamics and extensive vs. intensive margins of adjustment," Journal of Economic Dynamics and Control, Elsevier, vol. 162(C).

    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions

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