Working Paper: CEPR ID: DP16723
Authors: Kristian Behrens; Manass Drabo; Florian Mayneris
Abstract: We combine census and establishment-level data for 2001--2017 to study the impact of big manufacturing plant closures and mass layoffs on city-level demographic changes in Canada. We find that big plant closures and mass layoffs significantly affect the composition of the cities' population. They cause a decrease in the share of residents aged 0--19 and 20--54, and an increase in the share of residents aged 55+. We also find that households with kids are more likely to stay and migrants are more likely to leave. Cities that initially have a larger population and a bigger share of their workforce in the cultural and recreational services are more resilient to large negative employment shocks. These mitigating effects are heterogeneous across age groups.
Keywords: sociodemographic change; plant closures; downsizing; manufacturing; city resilience
JEL Codes: J10; R11; R12; R23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| plant closures (J65) | decline in subsequent population growth (J11) |
| job loss rate (J63) | decline in subsequent population growth (J11) |
| better initial endowments in education and health services (I24) | greater resilience to negative local labor demand shocks (J69) |
| plant closures (J65) | negative effects on employment in other sectors (F66) |