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Consequences of job loss for routine workers

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  • Yaroslav Yakymovych

    (Uppsala University, Institute for Housing and Urban Research)

Abstract

If displaced in mass layoffs, routine workers are hit by the combination of a severe shock and a long-term decrease in demand for their skills due to automation. I use matched employer–employee data from Sweden to show that displaced routine workers have worse labour market outcomes than displaced non-routine workers. Furthermore, a significant share of their earnings losses is passed through to disposable income, meaning that routine workers are not compensated by social insurance. I also find evidence in favour of routine workers’ larger losses being caused by the irrelevance of their pre-displacement occupation-specific human capital. Routine workers are more likely to switch occupations and industries upon re-employment. Their wages upon re-employment are lower compared to non-routine workers and compared to the mean wage in their new occupation. I do not find evidence that switching to a non-routine occupation reduces losses, with switchers instead appearing to do worse in the short-to-medium run.

Suggested Citation

  • Yaroslav Yakymovych, 2025. "Consequences of job loss for routine workers," Empirical Economics, Springer, vol. 69(6), pages 3967-3992, December.
    • Handle: RePEc:spr:empeco:v:69:y:2025:i:6:d:10.1007_s00181-025-02827-9
    DOI: 10.1007/s00181-025-02827-9
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    Keywords

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    JEL classification:

    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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