Advance Layoff Notices and Labor Market Forecasting

RePEc Short ID: pkr218
ORCID iD: 0000-0001-5922-5894

Krolikowski, Pawel; Lunsford, Kurt Graden

doi:10.26509/frbc-wp-202003

Working Paper

Advance Layoff Notices and Labor Market Forecasting

Abstract: We collect rich establishment-level data about advance layoff notices filed under the Worker Adjustment and Retraining Notification (WARN) Act since January 1990. We present in-sample evidence that the number of workers affected by WARN notices leads state-level initial unemployment insurance claims, changes in the unemployment rate, and changes in private employment. The effects are strongest at the one and two-month horizons. After aggregating state-level information to a national-level “WARN factor” using a dynamic factor model, we find that the factor substantially improves out-of-sample forecasts of changes of manufacturing employment in real time.

Keywords: initial UI claims.; mass layoffs; employment; unemployment; plant closings; WARN act;

JEL Classification: E27; J65; K31;

https://doi.org/10.26509/frbc-wp-202003