Big Plant Closures and Agglomeration Economies

Jordi Jofri-Monseny, Maria Sánchez-Vidal and Elisabet Viladecans-Marsal

SERC Discussion Papers from Centre for Economic Performance, LSE

Abstract: This paper analyses the effects of large manufacturing plant closures on local employment. Specifically, we estimate the net employment effects of the closure of 45 large manufacturing plants in Spain, which relocated abroad between 2001 and 2006. We run differences-in-differences specifications in which locations that experience a closure are matched to locations with similar pre-treatment employment levels and trends. The results show that when a plant closes, for each job directly lost in the plant closure, between 0.3 and 0.6 jobs are actually lost in the local economy. The adjustment is concentrated in incumbent firms in the industry that suffered the closure, providing indirect evidence of labor market pooling effects. We find no employment effects in the rest of manufacturing industries or in the services sectors. These findings suggest that traditional input-output analyses tend to overstate the net employment losses of large plant closures.

Keywords: Local employment; plant closures; input-output; agglomeration economies (search for similar items in EconPapers)
JEL-codes: J23 R12 R23 R58 (search for similar items in EconPapers)
Date: 2015-07
New Economics Papers: this item is included in nep-geo, nep-lma and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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http://cep.lse.ac.uk/pubs/download/sercdp0179.pdf (application/pdf)

Related works:
Working Paper: Big plant closures and agglomeration economies (2015)
Working Paper: Big plant closures and agglomeration economies (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:cep:sercdp:0179

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