The Mobility of Displaced Workers: How the Local Industry Mix Affects Job Search Strategies

CID Research Fellow & Graduate Student Working Paper No. 71

Frank Neffke, Anne Otto and Cesar Hidalgo
March 2016


Establishment closures leave many workers unemployed. Based on employment histories of 20 million German workers, we find that workers often cope with their displacement by moving to different regions and industries. However, which of these coping strategies is chosen depends on the local industry mix. A large local presence of predisplacement or related industries strongly reduces the rate at which workers leave the region. Moreover, our findings suggest that a large local presence of the predisplacement industry induces workers to shift search efforts toward this industry, reducing the spatial scope of search for jobs in alternative industries and vice versa.

Affiliated Program: Growth Lab