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Plant-level employment development before collective displacements: comparing mass layoffs, plant closures and bankruptcies

Author

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  • Daniel Fackler
  • Steffen Müller
  • Jens Stegmaier
Abstract
This article analyzes the development of employment levels and worker flows before bankruptcies, plant closure without bankruptcies and mass layoffs. Utilizing administrative plant-level data for Germany, we find no systematic employment reductions prior to mass layoffs, a strong and long-lasting reduction prior to closures, and a much shorter shadow of death preceding bankruptcies. Employment reductions in closing plants, in contrast to bankruptcies and mass layoffs, do not come along with increased worker flows. These patterns point to an intended and controlled shrinking strategy for closures without bankruptcy and to an unintended collapse for bankruptcies and mass layoffs.

Suggested Citation

  • Daniel Fackler & Steffen Müller & Jens Stegmaier, 2018. "Plant-level employment development before collective displacements: comparing mass layoffs, plant closures and bankruptcies," Applied Economics, Taylor & Francis Journals, vol. 50(50), pages 5416-5435, October.
    • Handle: RePEc:taf:applec:v:50:y:2018:i:50:p:5416-5435
    DOI: 10.1080/00036846.2018.1486994
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    Cited by:

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    2. Fackler, Daniel & Müller, Steffen & Stegmaier, Jens, 2017. "Explaining wage losses after job displacement: Employer size and lost firm rents," IWH Discussion Papers 32/2017, Halle Institute for Economic Research (IWH).
    3. Fackler, Daniel & Stegmaier, Jens & Upward, Richard, 2023. "Safety net or helping hand? The effect of job search assistance and compensation on displaced workers," IWH Discussion Papers 18/2023, Halle Institute for Economic Research (IWH).
    4. Garcia-Louzao, Jose, 2022. "Workers’ job mobility in response to severance pay generosity," Labour Economics, Elsevier, vol. 75(C).
    5. Fackler, Daniel & Stegmaier, Jens & Weigt, Eva, 2019. "Does extended unemployment benefit duration ameliorate the negative employment effects of job loss?," Labour Economics, Elsevier, vol. 59(C), pages 123-138.
    6. Atkins, Ryan & Favreau, Charles, 2022. "The effects of layoffs and plant closings on manufacturers’ market value," International Journal of Production Economics, Elsevier, vol. 245(C).
    7. Meekes, Jordy & Hassink, Wolter, 2020. "Fired and Pregnant: Gender Differences in Job Flexibility Outcomes after Job Loss," IZA Discussion Papers 13779, Institute of Labor Economics (IZA).
    8. Sverre J. Herstad & Tore Sandven, 2020. "A closer look at the relationship between innovation and employment growth at the firm level," Journal of Evolutionary Economics, Springer, vol. 30(2), pages 375-399, April.

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    More about this item

    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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