Économie et Statistique n° 446 Urban Fragmentation and Economic Shocks - Petrol Consumption - Assessing the Impact of Sudden Business Closures on Wage Trajectories
Assessing the Impact of Sudden Business Closures on Wage Trajectories
For wage-earners who have been working in the same firm for years, sometimes decades, the closure of their employer's business is a shock that can have long-term repercussions. Closures impact an annual average of roughly 2% of employees of firms employing more than ten people. This article compares their later wage trajectories with those of other employees and seeks to measure the lasting effects of the shock. We observe an additional 6% or so of departures from paid employment in the first two years after closure. More than half of the employees impacted by a closure eventually move to another employment area. One-third of these “mobile” workers are reassigned to new jobs in the same firm. Gross earnings of those who have not left paid employment for good gradually catch up with the earnings of non-impacted workers without quite drawing even. Seven years later, a small but significant gap of about 5% persists. These effects are close to those observed in some countries of northern Europe (Sweden and Norway) but far weaker than those recorded in the United States. However, we lack statistics in France on compensation actually received by workers laid off after a closure. This prevents us from making a complete assessment of the impact of these events on the income of the employees concerned.