Locate Your Nearest Exit: Mass Layoffs and Local Labor Market Response

Andrew Foote; Michel Grosz; Ann Huff Stevens

doi:10.3386/w21618

Locate Your Nearest Exit: Mass Layoffs and Local Labor Market Response

Andrew Foote, Michel Grosz & Ann Huff Stevens

Working Paper 21618

DOI 10.3386/w21618

Issue Date October 2015

Large shocks to local labor markets can cause long-lasting changes to employment, unemployment and the local labor force. This study examines the relationship between mass layoffs and the long-run size of the local labor force. It considers four main channels through which the local labor force may adjust: in-migration, out-migration, retirement, and disability insurance enrollment. We show that these channels account for over half of the labor force reductions following a mass layoff event. By measuring the residual difference between these channels and net labor force change, we also show that labor force non-participation accounted for much of the local labor force response in the period during and after the Great Recession.

We are grateful to David Autor, Ben Hansen, and Giovanni Peri for their useful comments and suggestions, and to Nancy Early for her generous help and data expertise. We also thank seminar participants at Texas A&M, UC Davis, UCSD, the 2015 Population Association of America meeting, and the 2014 Western Economic Association meeting, This research was supported by the U.S. Social Security Administration through grant #1DRC12000002-03 to the National Bureau of Economic Research as part of the SSA Disability Research Consortium. The findings, opinions and conclusions expressed herein are solely those of the author(s) and do not necessarily represent the views of the U.S. Census Bureau, the SSA, any agency of the Federal Government, or the the National Bureau of Economic Research. The research in this paper does not use any confidential Census Bureau information and was undertaken while Foote was at University of California, Davis.

Ann Huff Stevens
I am the PI on a grant from the US Department of Health and Human Services that supports the Center for Poverty Research at UC Davis. No funding from HHS was used to support this research and no one from HHS has reviewed this work.
MARC RIS BibTeΧ

Locate Your Nearest Exit: Mass Layoffs and Local Labor Market Response

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