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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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    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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