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The two faces of worker specialization

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  • Bárány, Zsófia L.
  • Holzheu, Kerstin

Abstract

We study how worker specialization — the distance between a worker’s skill set and those prevalent in the labor market — shapes employment outcomes. Using US and French data, we first document that specialized jobs are characterized by asymmetric skill profiles and a scarcity of nearby employment opportunities. We incorporate these features into a random search model with multidimensional skills, mismatch penalties and skill complementarity. We show that specialization lowers job-finding rates due to a lack of suitable jobs, but raises re-employment wages via improved productivity. Empirical evidence from displaced workers in both countries confirms these predictions. Our findings reconcile competing views in the literature by showing that specialization entails trade-offs and is neither uniformly beneficial nor harmful.

Suggested Citation

  • Bárány, Zsófia L. & Holzheu, Kerstin, 2026. "The two faces of worker specialization," Labour Economics, Elsevier, vol. 98(C).
    • Handle: RePEc:eee:labeco:v:98:y:2026:i:c:s0927537125001538
    DOI: 10.1016/j.labeco.2025.102829
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    Cited by:

    1. Miklos Koren & Zsofia Barany & Ulrich Wohak, 2026. "The Directions of Technical Change," Papers 2602.12958, arXiv.org, revised Feb 2026.

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    More about this item

    Keywords

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    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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