Spillover Effects of Mass Layoffs. Issue 1 (14th December 2018)

• Record Type: Journal Article
• Authors: Gathmann, Christina; Helm, Ines; Schönberg, Uta
• Is Part Of: Journal of the European Economic Association. Volume 18:Issue 1(2020)
• Page Start: 427
• Page End: 468
• Publication Date: 2018-12-14
• Subjects: Economics -- Periodicals; Économie politique -- Périodiques; Science économique; Périodique électronique (Descripteur de forme); Ressource Internet (Descripteur de forme); 330
• DOI: 10.1093/jeea/jvy045
• Languages: English
• ISSNs: 1542-4766

Abstract

Abstract: Using administrative data on firms and workers in Germany, we quantify the spillover effects of mass layoffs. Our empirical strategy combines matching with an event study approach to trace employment and wages in regions hit by a mass layoff relative to suitable control regions. We find sizable and persistent negative spillover effects on the regional economy: regions, and especially firms producing in the same broad industry as the layoff plant, lose many more jobs than in the initial layoff. In contrast, negative employment effects on workers employed in the region at the time of the mass layoff are considerably smaller. Strikingly, workers younger than 50 suffer no employment losses, as geographic mobility fully shields them from the decline in local employment opportunities.