The real effects of Brexit on labor demand: evidence from firm-level data
The real effects of Brexit on labor demand: evidence from firm-level data
Using the distance to the Irish border of UK firms that have not changed their location since the 2016 Referendum to isolate the effects of Brexit at the firm level, we find that Brexit implementation in 2020 caused exposed firms to cut their workforce by up to 15.7% on average relative to non-exposed firms. These exposed firms are also more likely to have lower growth expectations and more likely to increase their research and development (R&D) expenditure. In addition, having ex-ante trade exposure, either with or outside the EU, can help alleviate such negative effects of Brexit. Such results highlight the role of trade exposure and the expectation channel, and support the hypothesis that firms prioritize innovations in response to Brexit.
Brexit, EU workers, Firm responses, Technology, Trade exposure
Do, Hang
98fe3248-9673-4c6a-8f9a-74cf68a59930
Duong, Kiet Tuan
3045ac6b-a7ad-4356-9ac0-b6ce5ae93cfe
Huynh, Luu Duc Toan
483d087e-e24e-4cfe-8e6b-3da828975c0e
Vu, Nam T.
8924521e-ef49-4b71-b852-1424f8cb2d79
13 August 2025
Do, Hang
98fe3248-9673-4c6a-8f9a-74cf68a59930
Duong, Kiet Tuan
3045ac6b-a7ad-4356-9ac0-b6ce5ae93cfe
Huynh, Luu Duc Toan
483d087e-e24e-4cfe-8e6b-3da828975c0e
Vu, Nam T.
8924521e-ef49-4b71-b852-1424f8cb2d79
Do, Hang, Duong, Kiet Tuan, Huynh, Luu Duc Toan and Vu, Nam T.
(2025)
The real effects of Brexit on labor demand: evidence from firm-level data.
Journal of International Economics, 157, [104129].
(doi:10.1016/j.jinteco.2025.104129).
Abstract
Using the distance to the Irish border of UK firms that have not changed their location since the 2016 Referendum to isolate the effects of Brexit at the firm level, we find that Brexit implementation in 2020 caused exposed firms to cut their workforce by up to 15.7% on average relative to non-exposed firms. These exposed firms are also more likely to have lower growth expectations and more likely to increase their research and development (R&D) expenditure. In addition, having ex-ante trade exposure, either with or outside the EU, can help alleviate such negative effects of Brexit. Such results highlight the role of trade exposure and the expectation channel, and support the hypothesis that firms prioritize innovations in response to Brexit.
Text
1-s2.0-S0022199625000856-main
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Accepted/In Press date: 14 July 2025
e-pub ahead of print date: 6 August 2025
Published date: 13 August 2025
Keywords:
Brexit, EU workers, Firm responses, Technology, Trade exposure
Identifiers
Local EPrints ID: 504055
URI: http://eprints.soton.ac.uk/id/eprint/504055
ISSN: 0022-1996
PURE UUID: 15014e89-8c54-4dd2-ad88-2606b76b4150
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Date deposited: 22 Aug 2025 16:32
Last modified: 26 Aug 2025 02:02
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Author:
Kiet Tuan Duong
Author:
Luu Duc Toan Huynh
Author:
Nam T. Vu
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