Deindustrialization and demographic change: Evidence from big plant closures and downsizing

Kristian Behrens, Drabo, Manassé and Florian Mayneris

No 16723, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We estimate the causal effect of big manufacturing plant closures and downsizing on the socio-economic composition of Canadian cities between 2001 and 2021. Our instrumental variables estimates show that big manufacturing plant closures and downsizing—large local labor demand shocks—lead to less population growth and a shift in the demographic composition of cities towards an older population with less families. We find no other robust sociodemographic changes following big manufacturing plant closures. Exploiting heterogeneity across cities, we also find no robust evidence that initial city size and industrial diversity help to mitigate those negative effects. According to our results, the only factor, if anything, that may help make cities more resilient is the initial presence of cultural and recreational services.

Keywords: Socio-demographic change; Plant closures; Downsizing; Manufacturing; City resilience (search for similar items in EconPapers)
JEL-codes: J10 R11 R12 R23 (search for similar items in EconPapers)
Date: 2021-11
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