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Job Loss and Regional Mobility

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  • Huttunen, Kristiina

    () (VATT, Helsinki)

  • Moen, Jarle

    () (Norwegian School of Economics)

  • Salvanes, Kjell G.

    () (Norwegian School of Economics)

Abstract

It is well documented that displaced workers suffer severe earnings losses, but not why this is so. One reason may be that workers are unable or unwilling to move to regions with better employment opportunities. We study this and find that job displacement increases regional mobility but, surprisingly, we also find that displaced workers who move suffer larger income losses than displaced workers who stay in the same region. This is not a selection effect, but reflects the fact that non-economic factors such as family ties are very important for the decision to migrate. Workers are less likely to move if they have family in the region where they already live, and job loss stimulates workers to relocate with parents and siblings when they live in different regions. Looking at earnings we find that the entire post displacement income difference between displaced movers and stayers is driven by workers moving to regions where their parents live or to rural areas. Furthermore, when looking at long-run family income, we find that the difference between displaced movers and stayers is very modest. With respect to selection, we find that migrants are positively selected on average, but very heterogeneous. They seem to be drawn disproportionately both from the high and the low end of the skill distribution in the region they leave.

Suggested Citation

  • Huttunen, Kristiina & Moen, Jarle & Salvanes, Kjell G., 2015. "Job Loss and Regional Mobility," IZA Discussion Papers 8780, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp8780
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    Cited by:

    1. Joanna Tyrowicz & Lucas van der Velde, 2017. "When the opportunity knocks: large structural shocks and gender wage gaps," GRAPE Working Papers 2, GRAPE Group for Research in Applied Economics.
    2. Gaetano Basso & Francesco D’Amuri & Giovanni Peri, 2019. "Immigrants, Labor Market Dynamics and Adjustment to Shocks in the Euro Area," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 67(3), pages 528-572, September.
    3. Fang, Tony & Messacar, Derek, 2019. "Voluntary Job Separations and Traditional versus Flexible Workplace Saving Plans: Evidence from Canada," IZA Discussion Papers 12262, Institute of Labor Economics (IZA).
    4. Arthur Grimes & Shaan Badenhorst & David C. Maré & Jacques Poot, 2020. "Hometown whanau or big city millennials? The economic geography of graduate destination choices in New Zealand," Working Papers 20_04, Motu Economic and Public Policy Research.
    5. Ciani, Emanuele & David, Francesco & de Blasio, Guido, 2019. "Local responses to labor demand shocks: A Re-assessment of the case of Italy," Regional Science and Urban Economics, Elsevier, vol. 75(C), pages 1-21.
    6. Maczulskij, Terhi & Böckerman, Petri & Kosonen, Tuomas, 2018. "Job Displacement, Inter-Regional Mobility and Long-Term Earnings," IZA Discussion Papers 11635, Institute of Labor Economics (IZA).
    7. Daniel Fackler & Lisa Rippe, 2016. "Losing Work, Moving away? Regional Mobility after Job Loss," SOEPpapers on Multidisciplinary Panel Data Research 861, DIW Berlin, The German Socio-Economic Panel (SOEP).
    8. Rattsø, Jørn & Stokke, Hildegunn E., 2019. "Identification of the private-public wage gap," Labour Economics, Elsevier, vol. 59(C), pages 153-163.
    9. 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.
    10. 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.
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    12. Bennett, Patrick & Ouazad, Amine, 2018. "Job Displacement, Unemployment, and Crime: Evidence from Danish Microdata and Reforms," Discussion Paper Series in Economics 32/2018, Norwegian School of Economics, Department of Economics, revised 21 Dec 2018.
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    More about this item

    Keywords

    family ties; earnings; regional mobility; downsizing; plant closures;

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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