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

Andrew Foote, Michel Grosz, Ann Huff Stevens

NBER Working Paper No. 21618
Issued in October 2015
NBER Program(s):Aging, Labor Studies

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.

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Document Object Identifier (DOI): 10.3386/w21618

Published: Locate Your Nearest Exit: Mass Layoffs and Local Labor Market Response Andrew Foote, Michel Grosz, and Ann Stevens ILR Review First Published January 31, 2018 https://doi.org/10.1177/0019793917753095

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