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Labour market transitions after layoffs: the role of occupational skills

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  • Miriam Rinawi
  • Uschi Backes-Gellner

Abstract

We study the role of occupational skills for labour market transitions after layoffs. Drawing on Lazear’s skill-weights approach, we develop empirical measures for occupational specificity and the skill distance between occupations to investigate how skills map into job mobility and wages. Our analysis reveals several important insights. First, higher occupational specificity is associated with lower job mobility and a longer period of unemployment. However, it is also associated with higher wages. Workers receive a wage premium of about 9% for re-employment in a one standard deviation more specific occupation. These results suggest a risk–return trade-off to educational investments into more specific skills. Second, the skill distance is negatively associated with wages. Workers moving between occupations with similar skill requirements suffer smaller wage losses than those with more distant moves. Thus, skills appear to be transferable across occupations and to play a pivotal role in the determination of wages.

Suggested Citation

  • Miriam Rinawi & Uschi Backes-Gellner, 2021. "Labour market transitions after layoffs: the role of occupational skills," Oxford Economic Papers, Oxford University Press, vol. 73(1), pages 76-97.
    • Handle: RePEc:oup:oxecpp:v:73:y:2021:i:1:p:76-97.
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    File URL: http://hdl.handle.net/10.1093/oep/gpz064
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    Cited by:

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    2. Eggenberger, Christian & Rinawi, Miriam & Backes-Gellner, Uschi, 2018. "Occupational specificity: A new measurement based on training curricula and its effect on labor market outcomes," Labour Economics, Elsevier, vol. 51(C), pages 97-107.
    3. Kuhn, Andreas, 2022. "The Geography of Occupational Choice: Empirical Evidence from the Swiss Apprenticeship Market," IZA Discussion Papers 15679, Institute of Labor Economics (IZA).
    4. Girsberger, Esther Mirjam & Koomen, Miriam & Krapf, Matthias, 2022. "Interpersonal, cognitive, and manual skills: How do they shape employment and wages?," Labour Economics, Elsevier, vol. 78(C).

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    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • 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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