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Effects of mass layoffs on local employment—evidence from geo-referenced data

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  • Philipp vom Berge
  • Achim Schmillen

Abstract

Using an event study approach and a novel data set that links administrative information on German establishments with exact distance measures from geo-referenced address data, we analyze the net impact of mass layoffs on local employment. We find that local spillovers significantly attenuate the direct impact of mass layoffs on municipal-level employment. About a quarter of the 1-year direct employment loss due to a mass layoff event is absorbed within the same municipality. Local spillovers are especially pronounced very close to the mass layoff site; the majority of the absorption is concentrated within a 1000-m radius. There is little evidence of spillovers beyond the affected municipality.

Suggested Citation

  • Philipp vom Berge & Achim Schmillen, 2023. "Effects of mass layoffs on local employment—evidence from geo-referenced data," Journal of Economic Geography, Oxford University Press, vol. 23(3), pages 509-539.
    • Handle: RePEc:oup:jecgeo:v:23:y:2023:i:3:p:509-539.
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    Cited by:

    1. Axelle Arquié & Thomas Grjebine, 2024. "Are Mass Layoffs Individually Costly But Socially Beneficial?," Working Papers 2024-03, CEPII research center.

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    More about this item

    Keywords

    Mass layoffs; local spillovers; geo-referenced data;
    All these keywords.

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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