Assessing the Impact of Mass Layoffs on the Labor Market: A Spatial Perspective

Viviana Celli, Augusto Cerqua and Guido Pellegrini

Rivista economica del Mezzogiorno, 2024, issue 4, 711-735

Abstract: This study aims to analyze the short- and long-term impact of mass layoffs in the manufacturing sector on local economies, investigating the heterogeneity of outcomes across Italy’s North-South divide. Our research introduces several innovative elements. First, we identified mass layoffs occurring between 2008 and 2011 using six different data sources, linking them with key socio-economic variables relevant to the study. To this new comprehensive dataset, we applied a recent econometric method based on a nonparametric generalization of the Difference-in-Differences estimator, specifically designed for Time-Series Cross-Sectional data, to accurately estimate causal parameters of interest. The results indicate that such shocks negatively impact employment in the local labor market (LLM) where they occur, with significant regional variation in both impact magnitude and statistical significance. In Northern Italy’s LLMs, the decline in manufacturing employment following the shock is –11% in the first year and reaches –17% after nine years, though long-term effects lack statistical significance. In Central-Southern Italy, mass layoffs have a strong, statistically significant, and persistent negative effect in the long term: employment in the affected sector drops by 26% in the first year, with a continuing decline reaching –32% after nine years. The broader economy appears only marginally affected by these shocks.

Keywords: Mass Layoff in the Manifacturing Sector; Local Labor Market; Territorial Effects; Casual Inference (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.rivisteweb.it/download/article/10.1432/118049 (application/pdf)
https://www.rivisteweb.it/doi/10.1432/118049 (text/html)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mul:jqyfkm:doi:10.1432/118049:y:2024:i:4:p:711-735

Access Statistics for this article

Rivista economica del Mezzogiorno is currently edited by Riccardo Padovani

More articles in Rivista economica del Mezzogiorno from Società editrice il Mulino
Bibliographic data for series maintained by ().