Where do industrial workers go after plant closure? Survey evidence two years after job displacement

This paper analyzes the re-employment prospects of displaced industrial workers. While scholars in political economy are pessimistic about the job prospects of displaced blue collar workers, the literature on labour market flows expects relatively smooth transitions into new jobs. We empirically examine these diverging views based on an individual-level survey on mass redundancy from five plants in Switzerland. Our analysis produces three main results. First, a surprisingly large share of displaced workers was back in employment about two years after being laid-off. 69 per cent were re-employed at the moment of the survey, 17 per cent remained unemployed and 11 per cent had gone into (early) retirement. Interestingly, a majority of workers did not transit to a service job, but returned to manufacturing. Second, our analysis shows smaller differences by education than expected. While having a tertiary degree improves the job prospects, re-employment rates vary little between highly and low educated workers. Third, we find a strong age barrier in re-employment. Among workers above 55 years, over 30 per cent were still unemployed about two years after plant closure. Re-employment rates thus vary much more between age cohorts than between educational levels, men and women or blue and white collar employees.