Reconsidering the Cost of Job Loss: Evidence from Redundancies and Mass Layoffs

Jonas Cederlöf

No 25156, RFBerlin Discussion Paper Series from ROCKWOOL Foundation Berlin (RFBerlin)

Abstract: This paper studies the consequences of job loss. While previous literature has relied on mass layoffs and plant closures for identification, I exploit discontinuities in the likelihood of displacement generated by a last-in-first-out rule used at layoffs in Sweden. Matching data on individual layoff notifications to administrative records, I find that permanent earnings losses are only found among workers losing their job in mass layoffs, whereas workers displaced in smaller layoffs fully recover. Auxiliary analysis suggests that larger layoffs increase exposure to non-employment, prolong unemployment duration and cause workers to leave the labor force to a greater extent.

Keywords: last-in-first-out; job loss; displaced worker; mass layoff; earnings loss (search for similar items in EconPapers)
JEL-codes: J63 J64 J65 (search for similar items in EconPapers)
Date: 2025-12
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Persistent link: https://EconPapers.repec.org/RePEc:crm:wpaper:25156

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