Career Values and Labor Market Shocks

Career progression is important for people’s lives and economic decisions. We develop an empirical measure of an occupation’s local “career value”—the long-run value of the anticipated earnings from working in that job and following the career ladder associated with it. We document that career values have stagnated during the 2000-2016 period, despite growing wages, due to deterioration in job-related upward mobility. Declines in career values are associated with reduced housing construction and college attainment and higher Republican vote shares in 2016, consistent with career values shaping forward-looking household decisions. We then illustrate how the measure can be used to study labor market shocks. First, we provide an in-depth case study of exposure to industrial robots to demonstrate the value of the career-value framework for decomposing labor market shocks into wage and career-ladder channels, tracing heterogeneity and worker-level transitions, and highlighting the role of worker mobility. We find that one additional robot per 1,000 workers lowered local career values by about 1.3%, with about three-fifths of the decline operating through wages and just over a third through the deterioration of career paths. Robotization exposure reduced transitions to better-paid occupations and redirected workers toward similarly- or lower-paid jobs, particularly in high-manufacturing regions. Second, we apply the same decomposition comparatively to the Chinese import competition trade shock and to local house-price declines during the Great Recession. The comparison reveals distinct channel and timing profiles across shocks that wage or employment measures alone do not reveal.