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Job Training Mismatch and the COVID-19 Recovery: A Cautionary Note from the Great Recession

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Abstract

Displaced workers have been shown to endure persistent losses years beyond their initial job separation events. These losses are especially amplified during recessions. (1) One explanation for greater persistence in downturns relative to booms, is that firms and industries on the margin of structural change permanently shift the types of tasks and occupations demanded after a large negative shock (Aghion et al. (2005)), but these new occupations do not match the stock of human capital held by those currently displaced. In response to COVID-19, firms with products and services that complement social-distancing (like Amazon distribution centers) may continue hiring during and beyond the recovery, while workers displaced from higher risk industries with more stagnant demand (for example, airport personnel, local retail clerks) are left to adjust to less familiar job opportunities. As some industries reopen gradually while others remain stunted, what role might workforce development programs have in bridging the skill gap such that displaced workers are best prepared for this new reality of work?

Suggested Citation

  • Benjamin Hyman & Karen X. Ni, 2020. "Job Training Mismatch and the COVID-19 Recovery: A Cautionary Note from the Great Recession," Liberty Street Economics 20200527, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:88057
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    More about this item

    Keywords

    COVID-19; recovery training; mismatch; workforce development;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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