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Are larger labor market more resilient? Evidence of the French army restructuring on exit from unemployment

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  • Mathieu Sanch-Maritan

    () (CREAM - Centre de Recherche en Economie Appliquée à la Mondialisation - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université - IRIHS - Institut de Recherche Interdisciplinaire Homme et Société - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université)

  • Lionel Védrine

    () (CESAER - Centre d'Economie et de Sociologie Rurales Appliquées à l'Agriculture et aux Espaces Ruraux - INRA - Institut National de la Recherche Agronomique - AgroSup Dijon - Institut National Supérieur des Sciences Agronomiques, de l'Alimentation et de l'Environnement)

Abstract

This article explore how the relation between economic shocks and local unemployment can be mitigated by labor market size. We exploit a quasi-natural experiment by studying the economic impact of 357 local shocks both negative and positive generated by the reform and the restructuring of the French army. Exploiting a geo-referenced dataset of unemployment spell over an extensive period of time (2005-2014), we are able to measure the impact of these local shock on the rate at which unemployed workers find a job. To construct a credible counterfactual for each zone which experienced a closure, we use an interactive fixed effects model. We show that contractions in military personnel reduce the local likelihood of finding a job. Moreover, our results reveal some heterogeneity in the local economy's resilience. In line with our theoretical model, we show that city size is a relevant explanation for the observed heterogeneity in resilience: the likelihood of finding a job is less affected in denser area by a relative equal-sized shift in labor demand.

Suggested Citation

  • Mathieu Sanch-Maritan & Lionel Védrine, 2019. "Are larger labor market more resilient? Evidence of the French army restructuring on exit from unemployment," Working Papers hal-02332809, HAL.
  • Handle: RePEc:hal:wpaper:hal-02332809
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-02332809
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    References listed on IDEAS

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    Keywords

    Labor market shocks; Resilience; Common factor panel; Heterogeneous effects; Urban-Rural gradient 1;

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