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The effects of a large industrial investment on employment in a remote and sparsely populated area using a synthetic control approach
Umeå University, Faculty of Social Sciences, Centre for Regional Science (CERUM). Umeå University, Faculty of Social Sciences, Department of Geography.ORCID iD: 0000-0002-7179-347x
Umeå University, Faculty of Social Sciences, Department of Geography. Umeå University, Faculty of Social Sciences, Centre for Regional Science (CERUM).ORCID iD: 0000-0003-3570-7690
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Economics. Umeå University, Faculty of Social Sciences, Centre for Regional Science (CERUM). Department of Economics and Centre for Regional Science (CERUM) Umeå University.ORCID iD: 0000-0002-7905-1825
2023 (English)In: Regional Science Policy & Practice, E-ISSN 1757-7802, Vol. 15, no 7, p. 1553-1576Article in journal (Refereed) Published
Abstract [en]

This article examines the impact of establishing a large industrial manufacturing entity on employment and the labor market in a remote, sparsely populated part of Sweden, focusing on how it affects total regional employment because industrial policies aiming to attract investment and reignite employment in stagnating regions have been a central policy tool. The empirical analysis is based on the synthetic control method, which enables the estimation of place-specific causal effects. Using aggregated microdata from 1995 to 2019, the results indicate that employment in the treated region, as compared to synthetic regions, has been negatively affected by the manufacturing establishment. However, the short- and long-term effects differ across different labor market segments (same, related, and unrelated industries) and according to firm size. Overall, the findings suggest that large manufacturing investment does not necessarily have a positive or instantaneous impact on total regional employment. It does, however, provide some potential for long-term diversification because employment in related activities grows in the long run.

Place, publisher, year, edition, pages
John Wiley & Sons, 2023. Vol. 15, no 7, p. 1553-1576
Keywords [en]
employment, large industrial investment, remote and sparsely populated areas, synthetic control method
National Category
Economics
Research subject
Economics
Identifiers
URN: urn:nbn:se:umu:diva-210452DOI: 10.1111/rsp3.12694ISI: 001027942200001Scopus ID: 2-s2.0-85165323109OAI: oai:DiVA.org:umu-210452DiVA, id: diva2:1772491
Funder
Riksbankens Jubileumsfond, M22-0029Available from: 2023-06-21 Created: 2023-06-21 Last updated: 2024-01-08Bibliographically approved

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Adjei, Evans KorangEriksson, RikardLundberg, Johan

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