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Not in my Community: Social Pressure and the Geography of Dismissals

Bassanini, Andrea; Brunello, Giorgio; Caroli, Eve (2014), Not in my Community: Social Pressure and the Geography of Dismissals. https://basepub.dauphine.fr/handle/123456789/13579

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Type
Document de travail / Working paper
Date
2014
Publisher
Université Paris-Dauphine
Series title
LEda Working Papers
Published in
Paris
Pages
46
Metadata
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Author(s)
Bassanini, Andrea
Institute for the study of labor [IZA]
Organisation de Coopération et de Développement Economiques = Organisation for Economic Co-operation and Development [OCDE]
Brunello, Giorgio
Institute for the study of labor [IZA]
Università degli Studi di Padova = University of Padua [Unipd]
Caroli, Eve
Institute for the study of labor [IZA]
Laboratoire d'Economie de Dauphine [LEDa]
Abstract (EN)
There is growing evidence that social pressure shapes firms' behavior. Given how sensitive communitiesare to downsizing, this suggests that firms are likely to be under strong social pressure when considering reducing employment. Using French linked employer-employee data, we show that social pressure induces firms torefrain from dismissing at short distance from their headquarters. More specifically, we find that, within firms, secondary establishments located further away fromheadquarters have higher dismissal rates than thoselocated closer, taking into account the possible endogeneity of plant location. We also find that the positive effect of distance on dismissals increases with the visibility of the firm in the local community of its headquarters. This effect is also stronger the greater the degree of selfishness of the community in which the headquarters are located. This suggests that local social pressure at headquarters is a key determinant of the positiverelationship between distance to headquarters and dismissals. We show that our results cannot be entirely accounted for by alternative explanations of the distance-dismissal relationship that are put forward in the literature.
Subjects / Keywords
social pressure; employment policies; Personnel Management; Labor Demand
JEL
M12 - Personnel Management; Executives; Executive Compensation
M51 - Firm Employment Decisions; Promotions
J23 - Labor Demand
J63 - Turnover; Vacancies; Layoffs
R12 - Size and Spatial Distributions of Regional Economic Activity

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