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Locate Your Nearest Exit: Mass Layoffs and Local Labor Market Response

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  • Andrew Foote
  • Michel Grosz
  • Ann Stevens

Abstract

Large shocks to local labor markets can cause long-lasting changes to employment, unemployment, and the local labor force. This study examines the relationship between mass layoffs and the long-run size of the local labor force. The authors consider four main channels through which the local labor force may adjust: in-migration, out-migration, retirement, and disability insurance enrollment. These channels, primarily out-migration, account for more than half of the labor force reduction over the past two decades. Findings show, however, that during and after the Great Recession, instead of out-migration, non-participation in the labor force grew to account for most of the local labor force exits following a mass layoff.

Suggested Citation

  • Andrew Foote & Michel Grosz & Ann Stevens, 2019. "Locate Your Nearest Exit: Mass Layoffs and Local Labor Market Response," ILR Review, Cornell University, ILR School, vol. 72(1), pages 101-126, January.
    • Handle: RePEc:sae:ilrrev:v:72:y:2019:i:1:p:101-126
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    12. Marta Bisztray, 2016. "The effect of foreign-owned large plant closures on nearby firms," CERS-IE WORKING PAPERS 1623, Institute of Economics, Centre for Economic and Regional Studies.
    13. Goos, Maarten & Rademakers, Emilie & Röttger, Ronja, 2021. "Routine-Biased technical change: Individual-Level evidence from a plant closure," Research Policy, Elsevier, vol. 50(7).
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    15. Bryan A. Stuart, 2022. "The Long-Run Effects of Recessions on Education and Income," American Economic Journal: Applied Economics, American Economic Association, vol. 14(1), pages 42-74, January.
    16. Tyler Ransom, 2022. "Labor Market Frictions and Moving Costs of the Employed and Unemployed," Journal of Human Resources, University of Wisconsin Press, vol. 57(S), pages 137-166.
    17. Sofía Fernández Guerrico, 2023. "Trade Shocks, Population Growth, and Migration," ULB Institutional Repository 2013/357236, ULB -- Universite Libre de Bruxelles.
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    19. Bekhtiar, Karim, 2024. "Robotization, Internal Migration and Rural Decline," VfS Annual Conference 2024 (Berlin): Upcoming Labor Market Challenges 302396, Verein für Socialpolitik / German Economic Association.
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    21. Vogel, Stephen & Miller, Cristina & Ralston, Katherine, 2021. "Impact of USDA's Supplemental Nutrition Assistance Program (SNAP) on Rural and Urban Economies in the Aftermath of the Great Recession," Economic Research Report 327185, United States Department of Agriculture, Economic Research Service.
    22. Ning Jia & Raven Molloy & Christopher Smith & Abigail Wozniak, 2023. "The Economics of Internal Migration: Advances and Policy Questions," Journal of Economic Literature, American Economic Association, vol. 61(1), pages 144-180, March.
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    More about this item

    Keywords

    displaced workers; labor force participation; migration; retirement; disability insurance; Great Recession;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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