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Not in my Community: Social Pressure and the Geography of Dismissals

Andrea Bassanini (), Giorgio Brunello () and Eve Caroli ()

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Abstract: There is growing evidence that social pressure shapes firms' behavior. Given how sensitive communitiesare to downsizing, this suggests that firms are likely to be under strong social pressure when considering reducing employment. Using French linked employer-employee data, we show that social pressure induces firms torefrain from dismissing at short distance from their headquarters. More specifically, we find that, within firms, secondary establishments located further away fromheadquarters have higher dismissal rates than thoselocated closer, taking into account the possible endogeneity of plant location. We also find that the positive effect of distance on dismissals increases with the visibility of the firm in the local community of its headquarters. This effect is also stronger the greater the degree of selfishness of the community in which the headquarters are located. This suggests that local social pressure at headquarters is a key determinant of the positiverelationship between distance to headquarters and dismissals. We show that our results cannot be entirely accounted for by alternative explanations of the distance-dismissal relationship that are put forward in the literature.

Keywords: Personnel Management; Labor Demand; social pressure; employment policies (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eur, nep-geo and nep-ure
Date: 2017-04-21
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-01511576
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Journal Article: Not in My Community: Social Pressure and the Geography of Dismissals (2017) Downloads
Working Paper: Not in my Community: Social Pressure and the Geography of Dismissals (2017)
Working Paper: Not in My Community: Social Pressure and the Geography of Dismissals (2015) Downloads
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