Long-term effects of public policy for displaced workers in Sweden

The objective of this paper is to study the long-term effects of policy measures for displaced workers. Our focus is on the individuals affected by the closure of the Uddevalla Shipyard in western Sweden in 1985 and the cutbacks at the LKAB mines in northern Sweden in 1983. These workers not only experienced job loss but were also target groups for extraordinary labour market policies. Using register data from Statistics Sweden (labour market status, earnings, education etc.), we follow those affected until 1999. We compare their experiences with the development of a large sample of other workers who lost their jobs because of plant closures in 1987–88 but who did not receive extraordinary measures. Estimations of the net effect of the extraordinary measures find that they did have positive long-term effects for the displaced shipyard workers and miners. They have higher employment, not higher unemployment, and higher earnings than the comparison group.