Reconsidering the cost of job loss: Evidence from redundancies and mass layoffs

Published: 05 February 2024

Author: Jonas Cederlöf, And

This paper studies the consequences of job loss. While previous literature has relied on mass layoffs and plant closures for identification, I exploit discontinuities in the likelihood of displacement
generated by a last-in-first-out rule used at layoffs in Sweden. Matching data on individual layoff notifications to administrative records, I find that permanent earnings losses are only found among workers losing their job in mass layoffs, whereas workers displaced in smaller layoffs fully recover. Auxiliary analysis suggests that large layoffs increase exposure to non-employment, prolong unemployment and cause workers to leave the labor force, conceivably by affecting the local labor market.


IFAU-Working paper 2024:2 "Reconsidering the cost of job loss" is written by Jonas Cedrlöf at IFAU. For more information contact Jonas Cederlöf, tel: +4618-471 60 67, e-mail: