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

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.

The Financial Channel of Wage Rigidity

“…35 Moreover, since the authors include fine year-industry-ZIP-code fixed effects in some specifications, the definition of a labor market is much finer than in the previous designs, which relied on the stronger no positive spillovers in the short run. Berge et al (2015) use similar data and plant closure events, and find zero short-run spillovers in local labor markets. I conclude that if anything, these event studies suggest the opposite sign of the spillovers than predicted by the perfect crowd-out benchmark of the linear model.…”

“…For one, investigating total county-level employment might confound firms' intensive labor demand responses with the extensive margin of substituting to employment in other locations. However, Gathmann et al (2014); Berge et al (2015), Giroud and Mueller (2015) mainly consider establishment-level intensive employment responses; Giroud and Mueller (2015) additionally decompose the employment responses, and find effects for both margins. 39 III.…”

How do mass lay-offs affect regional economies?

“…For an announcement to be included in the database, it should concern at least 100 jobs or 10% of the work force of more than 250 people. 2 Some of these announcements may be relatively small in terms of absolute numbers and as a percentage of the local labour force. Therefore, it is useful to assess the number of events by different threshold sizes.…”

“…2 Definition from Eurofound, available at https://www.eurofound.europa.eu/observatories/emcc/erm/factsheets Box 1.…”

Enhancing international partnership and co-operation in Friuli Venezia Giulia, Italy

“…Bilateral trade reached EUR 1.2 billion in 2022, reporting a 70% increase compared to 2021 in the aftermath of the COVID-19 pandemic. Noteworthy growth in exports to Serbia, more than doubling from 2015 to 2019 (109%), 41 underscores FVG's focus in this area. Italy ranks as the second-largest exporter to the Western Balkans, holding an 11.7% market share, trailing only Germany (13.1%).…”