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The early costs of plant closures: Evidence on lead effects on workers’ subjective and objective outcomes

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  • Wunder, Christoph
  • Zeydanli, Tugba

Abstract

This study investigates the lead effects of future plant closures for prospective displaced workers’ subjective and objective outcomes. We analyze the effects on their forward-looking subjective outcomes (job insecurity, probabilistic expectations of job loss and of job search), a current subjective outcome (job satisfaction), and current objective outcomes (weekly hours of work, earnings). We estimate the causal effect of the knowledge of future plant closure by combining propensity-score matching with fixed-effects difference-in-differences regressions using longitudinal data from the German Socio-Economic Panel (SOEP). Our analysis shows significant lead effects in the year before plant closure. Although wide confidence intervals preclude definitive conclusions, our evidence does not exclude the existence of lead effects two years prior to a plant closure. Additionally, the lead effects do not generally show heterogeneous results based on job position, gender, or immigrant status.

Suggested Citation

  • Wunder, Christoph & Zeydanli, Tugba, 2021. "The early costs of plant closures: Evidence on lead effects on workers’ subjective and objective outcomes," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 489-505.
    • Handle: RePEc:eee:jeborg:v:188:y:2021:i:c:p:489-505
    DOI: 10.1016/j.jebo.2021.05.023
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    More about this item

    Keywords

    Plant closure; Job displacement; Job insecurity; Job satisfaction; Probabilistic expectations; Subjective probability of job loss; Job search intentions; Matched difference-in-differences; SOEP;
    All these keywords.

    JEL classification:

    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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