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Upskilling: Do Employers Demand Greater Skill When Workers Are Plentiful?

Author

Listed:
  • Modestino, Alicia Sasser

    (Northeastern University)

  • Shoag, Daniel

    (Harvard University)

  • Ballance, Joshua

    (Federal Reserve Bank of Boston)

Abstract

In the wake of the Great Recession, policymakers and academics have expressed concerns about rising employer skill requirements. Using a large database of online job postings for middle-skill occupations, we demonstrate that employers opportunistically raise education and experience requirements, within occupations, in response to increases in the supply of relevant job seekers. This relationship is robust to numerous tests for potentially confounding factors, is present even within firm-job title pairs, and is consistent with the predictions of a standard employer search model. We further identify this effect by exploiting the natural experiment arising from troop withdrawals in Iraq and Afghanistan as an exogenous shock to local, occupation specific labor supply. Our results imply that increases in the number of people looking for work can account for roughly 30 percent of the total increase in employer skill requirements observed between 2007 and 2010.

Suggested Citation

  • Modestino, Alicia Sasser & Shoag, Daniel & Ballance, Joshua, 2015. "Upskilling: Do Employers Demand Greater Skill When Workers Are Plentiful?," Working Paper Series rwp15-013, Harvard University, John F. Kennedy School of Government.
  • Handle: RePEc:ecl:harjfk:rwp15-013
    as

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    File URL: https://research.hks.harvard.edu/publications/getFile.aspx?Id=1176
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    References listed on IDEAS

    as
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    2. Li, Yao, 2008. "Industrial Agglomeration and Wage Inequality in China," MPRA Paper 11426, University Library of Munich, Germany, revised Oct 2008.
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    5. James Albrecht & Susan Vroman, 2002. "A Matching Model with Endogenous Skill Requirements," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(1), pages 283-305, February.
    6. David H. Autor & David Dorn, 2013. "The Growth of Low-Skill Service Jobs and the Polarization of the US Labor Market," American Economic Review, American Economic Association, vol. 103(5), pages 1553-1597, August.
    7. Albert Saiz, 2010. "The Geographic Determinants of Housing Supply," The Quarterly Journal of Economics, Oxford University Press, vol. 125(3), pages 1253-1296.
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    9. Gautier, Pieter A, 2002. "Unemployment and Search Externalities in a Model with Heterogeneous Jobs and Workers," Economica, London School of Economics and Political Science, vol. 69(273), pages 21-40, February.
    10. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2008. "Trends in U.S. Wage Inequality: Revising the Revisionists," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 300-323, May.
    11. Brigitte C. Madrian & Lars John Lefgren, 1999. "A Note on Longitudinally Matching Current Population Survey (CPS) Respondents," NBER Technical Working Papers 0247, National Bureau of Economic Research, Inc.
    12. Bilmes, Linda J., 2013. "The Financial Legacy of Iraq and Afghanistan: How Wartime Spending Decisions Will Constrain Future National Security Budgets," Working Paper Series rwp13-006, Harvard University, John F. Kennedy School of Government.
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    Citations

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    Cited by:

    1. Clifford, Robert & Shoag, Daniel, 2016. ""No More Credit Score": Emplyer Credit Check Bans and Signal Substitution," Working Paper Series 16-008, Harvard University, John F. Kennedy School of Government.
    2. repec:ucp:jhucap:doi:10.1086/697242 is not listed on IDEAS
    3. Claudia Macaluso, 2017. "Skill Remoteness and Post-layoff Labor Market Outcomes," 2017 Meeting Papers 569, Society for Economic Dynamics.
    4. Michael J. Handel & Alexandria Valerio & Maria Laura Sánchez Puerta, 2016. "Accounting for Mismatch in Low- and Middle-Income Countries," World Bank Publications, The World Bank, number 24906.
    5. David Deming & Lisa B. Kahn, 2018. "Skill Requirements across Firms and Labor Markets: Evidence from Job Postings for Professionals," Journal of Labor Economics, University of Chicago Press, vol. 36(S1), pages 337-369.
    6. Andreas Kettemann & Andreas I. Mueller & Josef Zweimüller, 2018. "Vacancy durations and entry wages: evidence from linked vacancy-employer-employee data," ECON - Working Papers 312, Department of Economics - University of Zurich.
    7. Grinis, Inna, 2017. "The STEM requirements of "non-STEM" jobs: evidence from UK online vacancy postings and implications for skills & knowledge shortages," LSE Research Online Documents on Economics 85123, London School of Economics and Political Science, LSE Library.
    8. Robert Clifford & Daniel Shoag, 2016. "“No more credit score”: employer credit check bans and signal substitution," Working Papers 16-10, Federal Reserve Bank of Boston, revised 01 Mar 2016.
    9. Daron Acemoglu & Pascual Restrepo, 2018. "Low-Skill and High-Skill Automation," Journal of Human Capital, University of Chicago Press, vol. 12(2), pages 204-232.
    10. Andreas Kettemann & Andreas I. Mueller & Josef Zweimüller, 2018. "Vacancy durations and entry wages: evidence from linked vacancy-employer-employee data," ECON - Working Papers 312, Department of Economics - University of Zurich.
    11. Beblavý, Miroslav & Fabo, Brian & Lenaerts, Karolien, 2016. "Skills Requirements for the 30 Most-Frequently Advertised Occupations in the United States: An analysis based on online vacancy data," CEPS Papers 11406, Centre for European Policy Studies.
    12. Edward P. Lazear & Kathryn L. Shaw & Christopher T. Stanton, 2016. "Who Gets Hired? The Importance of Finding an Open Slot," NBER Working Papers 22202, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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