Advance Layoff Notices and Labor Market Forecasting
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.
Krolikowski, Pawel M., and Kurt G. Lunsford. 2020. “Advance Layoff Notices and Labor Market Forecasting” Federal Reserve Bank of Cleveland, Working Paper No. 20-03. https://doi.org/10.26509/frbc-wp-202003