Adapting to Scarcity: The Role of Firms in Occupational Transitions

This paper examines the circumstances under which firms facilitate occupational transitions, complementing prior work that focuses on workers' decisions. We link unemployment insurance records with application diaries and clickstream data from a recruitment platform to causally assess how candidates' occupational histories shape recruiters' hiring decisions. We find that the average candidate from a different occupation faces a 7% lower contact rate than equally qualified candidates who last worked in a recruiter's searched occupation. Using a new measure of skill overlap, we show that 60% of this penalty reflects that movers meet fewer skill requirements than incumbents. Occupational experience and qualifications further reduce the mover penalty, such that certain candidates returning to a prior occupation face no penalty at all. Finally, recruiters adapt to scarcity and contact more movers in tight occupations. Changes in firm behavior account for one-third of the increase in movers' application success in tight versus slack labor markets.