Updated: Aug 20, 2021

The process of removing resources from some sector of the economy. This may occur within firms, or in industries by a reduction in the number of firms. Shake-out is liable to be set off by bad times: cuts in demand induce firms to reduce both their capacity and their labour force, and cuts in profits induce firms to make more effort to remove organizational slack and may compel them to leave an industry.

Reference: Oxford Press Dictonary of Economics, 5th edt.

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James Knight
Editor of Education
James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.