Worker Impacts from the Shutdown of a National Manufacturing Industry

Ashani Abayasekara (), Sonja de New () and David Johnston ()
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Ashani Abayasekara: Health Economics Group, School of Public Health and Preventive Medicine, Monash University
Sonja de New: Centre for Health Economics, Monash Business School, Monash University
David Johnston: Centre for Health Economics, Monash Business School, Monash University

No 2025-15, Working Papers from Centre for Health Economics, Monash University

Abstract: As economies decarbonise and automate, entire industries within countries will disappear, raising questions about how displaced workers will fare and how policy can best support them. To provide evidence on this issue, this paper examines the economic and mental health consequences of the complete shutdown of Australia’s automotive manufacturing industry. Using linked administrative data, we estimate the medium-term effects of this large-scale closure relative to comparable workers in unaffected manufacturing and construction sectors. We find substantial and persistent declines in employment and salary income among displaced workers, with limited recovery over five years. These effects are concentrated among older and lower-skilled workers, who experience higher rates of joblessness, occupational downgrading, and transition into self-employment. In contrast, younger and higher-skilled workers recover more quickly. Despite substantial disruption, we find no increase in mental healthcare use, potentially reflecting the unusually comprehensive support programs provided before and after closure.

Keywords: Job displacement; layoffs; Industrial transitions; employment; mental health (search for similar items in EconPapers)
JEL-codes: I12 J23 J63 (search for similar items in EconPapers)
Date: 2025-10
New Economics Papers: this item is included in nep-hea
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