Job Loss and Regional Mobility

47 Pages Posted: 31 Jan 2015

See all articles by Kristiina Huttunen

Kristiina Huttunen

Uppsala University

Jarle Møen

Norwegian School of Economics (NHH) - Department of Business and Management Science

Kjell G. Salvanes

Norwegian School of Economics (NHH) - Department of Economics; IZA Institute of Labor Economics

Abstract

It is well documented that displaced workers suffer severe earnings losses, but not why this is so. One reason may be that workers are unable or unwilling to move to regions with better employment opportunities. We study this and find that job displacement increases regional mobility but, surprisingly, we also find that displaced workers who move suffer larger income losses than displaced workers who stay in the same region. This is not a selection effect, but reflects the fact that non-economic factors such as family ties are very important for the decision to migrate. Workers are less likely to move if they have family in the region where they already live, and job loss stimulates workers to relocate with parents and siblings when they live in different regions.Looking at earnings we find that the entire post displacement income difference between displaced movers and stayers is driven by workers moving to regions where their parents live or to rural areas. Furthermore, when looking at long-run family income, we find that the difference between displaced movers and stayers is very modest. With respect to selection, we find that migrants are positively selected on average, but very heterogeneous. They seem to be drawn disproportionately both from the high and the low end of the skill distribution in the region they leave.

Keywords: plant closures, downsizing, regional mobility, earnings, family ties

JEL Classification: J61, J63

Suggested Citation

Huttunen, Kristiina and Moen, Jarle and Salvanes, Kjell G., Job Loss and Regional Mobility. IZA Discussion Paper No. 8780. Available at SSRN: https://ssrn.com/abstract=2558359

Kristiina Huttunen (Contact Author)

Uppsala University ( email )

Box 513
Uppsala, 751 20
Sweden

Jarle Moen

Norwegian School of Economics (NHH) - Department of Business and Management Science ( email )

Helleveien 30
Bergen, NO-5045
Norway

Kjell G. Salvanes

Norwegian School of Economics (NHH) - Department of Economics ( email )

Helleveien 30
N-5035 Bergen
Norway
+47 5 595 9315 (Phone)
+47 5 595 9543 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
18
Abstract Views
244
PlumX Metrics