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Worker specialization and the consequences of occupational decline

Author

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  • Ek, Simon

    (IFAU - Institute for Evaluation of Labour Market and Education Policy)

Abstract

Are workers with poor outside opportunities less responsive and more susceptible to negative demand shifts in routine occupations? To answer this, I create and estimate an occupation specialization index (OSI) using Swedish register data and machine Learning tools. It measures the expected utility difference between a worker’s occupation and his best outside option. This determines the loss he is willing to tolerate to avoid switching. Low-OSI generalists disproportionately left routine work. Their future wage growth was comparable to similar workers initially in non-routine occupations. By contrast, routine specialists largely stayed put and experienced lower wage growth than generalists and non-routine specialists.

Suggested Citation

  • Ek, Simon, 2025. "Worker specialization and the consequences of occupational decline," Working Paper Series 2025:7, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    • Handle: RePEc:hhs:ifauwp:2025_007
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    More about this item

    Keywords

    Multidimensional skills; Occupational structure changes;

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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