Journal of Labor Economics Vol. 35 No. 2 2017

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

Andrea Bassanini¹; Giorgio Brunello^2,3; Eve Caroli^4,5,6

¹ Organisation de Coopération et de Développement Economiques · ² Ifo Institute for Economic Research · ³ University of Padua · ⁴ Laboratoire d’Economie de Dauphine · ⁵ Université Paris Dauphine-PSL · ⁶ Paris School of Economics

Abstract

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.

DOI

10.1086/689285

Volume

35

Issue

2

Pages

429-483

Language

en

Sources

openalex crossref

Cite

APA 7 MLA 9 Chicago (author–date) Harvard Elsevier Harvard (JFE, JBF…) The Accounting Review Academy of Management American Marketing Association INFORMS (Management Science) Copy citation Copied ✓