How do mass lay-offs affect regional economies?

Wessel Vermeulen and Nils Braakmann

No 2023/01, OECD Local Economic and Employment Development (LEED) Papers from OECD Publishing

Abstract: Mass lay-offs from firms and plant restructuring occur regularly and can have potentially large consequences on places and communities. Policy makers may consider supporting firms, in order to prevent mass lay-offs but at the risk of interfering with economic dynamism, or targeting affected workers, to help them transition to new employment. Which strategy (firms versus workers) is the most appropriate and under which circumstances can be informed by better understanding the nature of the economic impact from mass lay-offs. This paper estimates the impact of mass lay-offs between 2008-18 across small regions (TL3) in Europe on regional employment and productivity. It finds there are persistent negative employment effects of mass lay-offs, and rural regions are more negatively affected on average. In part because of differences in the nature of the firm in the region, its relationship with nearby suppliers and clients, and the broader economic context of the region, productivity effects can be both positive and negative over the longer term.

Keywords: economic shocks; local labour market; mass lay-offs; regional resilience (search for similar items in EconPapers)
JEL-codes: J21 R12 R23 (search for similar items in EconPapers)
Date: 2023-01-20
New Economics Papers: this item is included in nep-geo, nep-lma and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:oec:cfeaaa:2023/01-en

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