Redundancy duration and business alteration – Consequences of establishment closures in Sweden

Abstract

This thesis follows and analyses what happens to individuals who work at establishments that are closed down. I examine if and when the displaced workers are re-employed. Furthermore, I examine to what extent individuals have moved, changed industry of work, have started to commute or have become self-employed. Additionally I examine, if the workers become self- employed after displacement, how many of them that does so within the same industry of work as they initially got displaced from. A unique longitudinal matched employer-employee data incorporating all firms, establishments and their employees in Sweden between the years 1997-2008 is used. All individuals between 25 and 55 years of age at the time of displacement that were displaced between 2000 and 2003 due to establishment closures are followed over a five-year period of time. Consistent with previous empirical research, it is shown that an absolute majority of the workers that are displaced one given year also recovers within that same year. The results moreover express that the longer the displaced workers are out of employment, the larger is the willingness to change industry of work, change municipality of living or move into self-employment. The willingness to commute is however found to be fairly constant over time. Finally, I find that those who become self-employed to a greater extent start business in other industries than they were displaced from as time passes.