The Unemployment Route to Versatility

In this paper we document a common sense idea: When an individual is searching for a new job, the longer it takes the more s/he will be available to adapt her/his skills, often with a worsening in status and/or wage. We used a dataset of administrative source, containing a sample of individuals' working careers in the private sector, in Italy, years 1985-1996. We do not observe directly the search activity of individuals: What we observe is the re-entry time elapsing from the separation from a job spell, to the association to a new one. The information collected about the job spells, however, is quite rich, and allows a thorough analysis of the main features of job changes. If we do not take into account re-entry times into dependent work, the inter-industry mobility we report is relatively limited, even at high levels of disaggregation. Still (roughly) 50% of job changes occurs within the same 3-digit Ateco sectors, and without changing skill/status. If we condition on re-entry times, we find a positive effect on the probabilities of changing sector in the first months of the search, while for longer re-entry times, and of worsening the working status and wage.