Coping with job loss: evidence from military base closures

Abstract

AbstractWe examine how workers adjust in response to an unexpected job loss. Using the closure of military bases in Sweden, we find that displaced workers experience permanent income losses and immediately adjust along two main channels: regional and sector mobility. Displaced military workers are more likely to move to another municipality, start commuting, and change sectors. We also find that workers with mobility restrictions are less likely to change regions and they exhibit lower earnings in the longer run, a result that might help to explain some of the permanent income losses found in the literature.