Do mass layoffs affect voting behaviour? Evidence from the UK

Abstract

How bad are mass layoffs politically? We study this question across both regional and individual-level datasets. Using a difference-in-difference framework with differential timing on constituency-level data for the UK, we find no evidence that mass layoff announcements negatively affect incumbents – either locally or nationally – in the General Elections 2010, 2015, 2017 and 2019. Using individual data on party preferences, we demonstrate that our results are not an artefact of the UK majority voting system and associated tactical voting. We also find no evidence that the null results can be explained by increased outmigration of affected individuals or changes of candidates by political parties. We find evidence that economic expectations are not strongly affected by mass layoffs, which, although a surprising finding by itself, might help to explain the absence of an effect on political outcomes.