(The) impact of major regional industry decline on regional employment: a case study of Pyeongtaek city

Abstract

This paper investigates, using panel microdata of the number of workers classified by the regional district, industry, and type of workers, the effect of major regional industry decline on regional employment, specifically, Ssangyong Motors case in Pyeongtaek city. First, I check the preintervention period and conduct the synthetic control method for the service, wholesale & retail, and food & lodging sectors. Second, I perform a robustness check by donor pool restriction and placebo tests. It turned out that the decline of the Ssangyong Motors has a significant unemployment effect in Pyeongtaek city after the preintervention period in most periods for the food & lodging sector and in some periods for the service sector. Specifically, one year after the beginning of the Ssangyong Motors’ crisis, the service, and food & lodging sectors had a 12% and 14% decrease in employment respectively.