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Who recovers from a job loss? The importance of cognitive and non-cognitive skills

Author

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  • Dahlberg, Matz

    (IFAU - Institute for Evaluation of Labour Market and Education Policy)

  • Martén, Linna

    (Uppsala University)

  • Öckert, Björn

    (IFAU - Institute for Evaluation of Labour Market and Education Policy)

Abstract

A well-functioning labor market is characterized by job reallocations, but the individual costs can be vast. We examine if individual’s ability to cope with such adjustments depends on their cognitive and non-cognitive skills (measured by population-wide enlistment tests). Since selection into unemployment is a function of skills, we address the endogeneity of a job loss by exploiting the exogenous labor market shock provided by the military base closures in Sweden following the end of the Cold War. We find that labor earnings decrease and unemployment and social insurance benefits increase for displaced workers. In particular, individuals with high cognitive and, especially, non-cognitive skills face shorter unemployment spells than the individuals with low skills.

Suggested Citation

  • Dahlberg, Matz & Martén, Linna & Öckert, Björn, 2021. "Who recovers from a job loss? The importance of cognitive and non-cognitive skills," Working Paper Series 2021:2, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    • Handle: RePEc:hhs:ifauwp:2021_002
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    References listed on IDEAS

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    More about this item

    Keywords

    Cognitive and Non-cognitive skills; Displaced workers; Unemployment; Plant closure; Defense draw down;
    All these keywords.

    JEL classification:

    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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