Centre for Entrepreneurship, SMEs, Regions and Cities
How do mass lay-offs affect regional economies?
Mass lay-offs from firms and plant restructuring occur regularly and can have potentially
large consequences on places and communities. Policy makers may consider supporting
firms, in order to prevent mass lay-offs but at the risk of interfering with economic
dynamism, or targeting affected workers, to help them transition to new employment.
Which strategy (firms versus workers) is the most appropriate and under which circumstances
can be informed by better understanding the nature of the economic impact from mass
lay-offs. This paper estimates the impact of mass lay-offs between 2008-18 across
small regions (TL3) in Europe on regional employment and productivity. It finds there
are persistent negative employment effects of mass lay-offs, and rural regions are
more negatively affected on average. In part because of differences in the nature
of the firm in the region, its relationship with nearby suppliers and clients, and
the broader economic context of the region, productivity effects can be both positive
and negative over the longer term.
Published on January 20, 2023
In series:OECD Local Economic and Employment Development (LEED) Papersview more titles