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We estimate the effect of exposure to plant closure on crime using an individual-level panel data set containing criminal charges for all unmarried and employed Norwegian men below the age of 40. Men originally employed in plants that subsequently closed are 14 percent more likely to be charged of a crime than comparable men in stable plants. There is no difference in charge rates prior to closure, supporting a causal interpretation of our result. Within crime categories, we find no effect of plant closure on property crime, perhaps because closure has a small and insignificant effect on subsequent earnings. We estimate an effect of plant closure on categories of non-acquisitive crime, suggesting a role for mental distress or idleness. A role for idleness is supported by evidence that the effects of plant closure on crime tend to be more pronounced for crimes committed during the week than on weekends. Financial support from the National Science Foundation (SES-0417418) and the Norwegian Research Council (160965/V10).

Employers cannot always displace workers at their own discretion. In many countries, Employment Protection Legislation (EPL) includes restrictions on laying off workers. This paper studies whether employers use downsizing events, where the rules for dismissal differ from the rules that apply for individual dismissal, to displace workers selectively. We investigate empirically whether workers with low expected productivity relative to co-workers face particularly high exit risks when establishments downsize. Our evidence is consistent with establishments using downsizings as a sorting device to terminate the employment of the least profitable workers who are protected against dismissal under normal times of operation. However, only a minor share of the displacements in downsizings may be attributed to opportunistic sorting by employers, suggesting that EPL may not be an important obstacle to firms’ firing of individual workers. Keywords: Downsizing, sickness absence, employment protection This paper has received financial support from the Norwegian Research Council (grants # 156032 and # 156110), the Ministry of Labour and Social Inclusion (Frisch project #1391), and is part of the research of the ESOP Centre at the Department of Economics, University of Oslo.

We estimate the magnitude of social interaction effects in disability pension participation among older workers in Norway. Specifically, we investigate how a worker’s propensity to draw disability benefits is affected by a plausibly exogenous shock to the disability entry rate of similarly-aged workers in his or her neighborhood. The problem of omitted variable bias is addressed by employing a novel instrumental variable (IV) strategy, using plant downsizing at neighbors’ plants of employment as an instrument for the disability entry rate among one’s previously employed neighbors. Our IV estimates suggest that a one percentage point increase in the participation rate of previously employed neighbors increased the subsequent 4-year entry rate of workers by about one-half a percentage point. Numerous robustness and specification tests appear to support the validity of the identifying assumption in our IV strategy. Keywords: disability, downsizing, layoffs, plant closings, social insurance, social interaction, welfare norms

Using Norwegian register data we estimate how children’s school performance is affected by their parents’ exposure to plant closure. Fathers’ exposure leads to a substantial decline in children’s graduation-year grade point average, but only in municipalities with mediocre-performing job markets. The negative effect does not appear to be driven by a reduction in father’s income and employment, an increase in parental divorce, or the trauma of relocating. In contrast, mothers’ exposure leads to improved school performance. Our findings appear to be consistent with sociological “role theories,” with parents unable to fully shield their children from the stress caused by threats to the father’s traditional role as breadwinner, and mothers responding to job loss by allocating greater attention towards child rearing. Keywords: educational outcomes, downsizing, job loss, layoffs, plant closure

We investigate the impact of plant downsizing on disability pension utilization in Norway. Plant downsizing substantially increases the disability entry rate of workers in affected plants. Workers originally employed in plants that closed between 1993 and 1998 were 27.9 percent more likely to utilize disability pensions in 1999 than comparable workers in non-downsizing plants. The effect of downsizing is non-linear, with workers originally employed in plants downsizing 65-95 percent of their workforce more likely to enter disability than workers in fully closing plants. This is consistent with the signaling story of Gibbons and Katz (1991). We also estimate significant effects of downsizing on future earnings and mortality, suggesting the increase in disability participation could be driven by an adverse effect of downsizing on the economic opportunities or health of affected workers. Keywords: disability, social insurance, downsizing, layoffs, plant closings