After the Last Log : Economic Resilience in the Wake of Finnish Paper Mill Closures

Abstract

This thesis investigates the regional economic impacts of paper mill closures in Finland from the early 2000s onward, focusing on how structural features of local economies shape their resilience to industrial decline. Using a panel dataset of Finnish travel-to-work areas (TTWAs) and employing difference-in-differences (DiD) and event study methodologies, the study estimates the effects of mill closures on labor productivity, gross value added (GVA), and employment. Particular emphasis is placed on how sectoral diversity—measured through the Herfindahl-Hirschman Index (HHI)—moderates these outcomes. The results show that mill closures have had significant, though heterogeneous, impacts on regional productivity trajectories. While short-term labor market shocks are visible in the form of rising unemployment and declining GVA, these effects are not uniform across regions. Economically more diversified areas, with lower HHI scores, tend to exhibit greater resilience, suggesting that structural pluralism cushions the economic blow from large-scale industrial restructuring. Event study plots further support these findings, revealing variation in post-treatment trajectories between regions. The study contributes to literature on regional resilience by providing quantitative evidence on how economic structure shapes recovery capacity in the context of industrial decline.