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Big plant closures and agglomeration economies

Jofre-Monseny, Jordi, Sánchez-Vidal, Maria and Viladecans-Marsal, Elisabet (2015) Big plant closures and agglomeration economies. SERC discussion papers (SERCDP0179). Spatial Economics Research Centre, London, UK.

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Abstract

This paper analyses the effects of large manufacturing plant closures on local employment. Specifically, we estimate the net employment effects of the closure of 45 large manufacturing plants in Spain, which relocated abroad between 2001 and 2006. We run differences-in-differences specifications in which locations that experience a closure are matched to locations with similar pre-treatment employment levels and trends. The results show that when a plant closes, for each job directly lost in the plant closure, between 0.3 and 0.6 jobs are actually lost in the local economy. The adjustment is concentrated in incumbent firms in the industry that suffered the closure, providing indirect evidence of labor market pooling effects. We find no employment effects in the rest of manufacturing industries or in the services sectors. These findings suggest that traditional input-output analyses tend to overstate the net employment losses of large plant closures.

Item Type: Monograph (Discussion Paper)
Official URL: http://www.spatialeconomics.ac.uk/
Additional Information: © 2015 The Authors
Divisions: Spatial Economics Research Centre
Subjects: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HD Industries. Land use. Labor
JEL classification: J - Labor and Demographic Economics > J2 - Time Allocation, Work Behavior, and Employment Determination and Creation; Human Capital; Retirement > J23 - Employment Determination; Job Creation; Demand for Labor; Self-Employment
R - Urban, Rural, and Regional Economics > R1 - General Regional Economics > R12 - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade
R - Urban, Rural, and Regional Economics > R2 - Household Analysis > R23 - Regional Migration; Regional Labor Markets; Population
R - Urban, Rural, and Regional Economics > R5 - Regional Government Analysis > R58 - Regional Development Policy
Sets: Research centres and groups > Spatial Economics Research Centre
Collections > Economists Online
Date Deposited: 08 Dec 2015 11:45
Last Modified: 06 Jul 2019 23:25
Funders: Economic and Social Research Council, Department for Business, Innovation & Skills, Welsh Government
URI: http://eprints.lse.ac.uk/id/eprint/64621

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