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

Bassanini, Andrea; Brunello, Giorgio; Caroli, Eve

Bassanini, Andrea; Brunello, Giorgio; Caroli, Eve (2017), Not in my Community: Social Pressure and the Geography of Dismissals, Journal of Labor Economics, 35, 2, p. 429-483. 10.1086/689285

Type

Article accepté pour publication ou publié

External document link

https://hal.archives-ouvertes.fr/hal-01511576

Date

2017

Journal name

Journal of Labor Economics

Volume

Number

Pages

429-483

Abstract (EN)

We investigate the impact of local social pressure on firms' firing decisions. Using linked employer-employee data, we show that secondary establishments located further away from headquarters have higher dismissal rates than those located closer. The effect of distance on dismissals is stronger, the greater the visibility of the firm in the local community of its headquarters and the larger the degree of selfishness of that community. We show that these findings can be explained by the social pressure exerted by the communities where firms' headquarters are located, which induces CEOs to refrain from dismissing at short distance from their headquarters.

Subjects / Keywords

Dismissals; social pressure; J23; J63; M51; R12

JEL

J23 - Labor Demand
J63 - Turnover; Vacancies; Layoffs
M51 - Firm Employment Decisions; Promotions
R12 - Size and Spatial Distributions of Regional Economic Activity