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Occupational Switching and Self-Discovery in the Labor Market

Author

Listed:
  • Satoshi Tanaka

    (University of Queensland)

  • David Wiczer

    (FRB St. Louis)

  • Burhanettin Kuruscu

    (University of Toronto)

  • Fatih Guvenen

    (University of Minnesota)

Abstract

This paper studies workers' occupational switching behavior and how lifetime earnings inequality is affected by the match between workers' ability and the skills required by their occupation. Using Armed Services Vocational Aptitude Battery (ASVAB), O*NET, and National Longitudinal Survey of Youth 1979 (NLSY79), we create empirical measures of the match quality between each worker's ability and the skills emphasized by his/her occupation, and analyze their effects on workers' labor market outcomes. We find that low match quality---what we also call 'skill mismatch'---between one's skills and required occupational skills reduces wage growth during an occupational tenure. Furthermore there is a persistence across occupations: match quality in occupations held early in life has a strong effect on wages in future occupations. We view these findings within the context of a general equilibrium model of occupational choice and human capital accumulation. We believe that our study sheds light on the importance of (i) occupational match on determination of wages, and (ii) workers' learning on their ability and the skills required by occupations.

Suggested Citation

  • Satoshi Tanaka & David Wiczer & Burhanettin Kuruscu & Fatih Guvenen, 2015. "Occupational Switching and Self-Discovery in the Labor Market," 2015 Meeting Papers 1181, Society for Economic Dynamics.
  • Handle: RePEc:red:sed015:1181
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    File URL: https://economicdynamics.org/meetpapers/2015/paper_1181.pdf
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    References listed on IDEAS

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    1. Michaud, Amanda & Wiczer, David, 2018. "Occupational hazards and social disability insurance," Journal of Monetary Economics, Elsevier, vol. 96(C), pages 77-92.
    2. David H. Autor & Frank Levy & Richard J. Murnane, 2003. "The skill content of recent technological change: an empirical exploration," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.
    3. Fane Groes & Philipp Kircher & Iourii Manovskii, 2015. "The U-Shapes of Occupational Mobility," Review of Economic Studies, Oxford University Press, vol. 82(2), pages 659-692.
    4. Topel, Robert H, 1991. "Specific Capital, Mobility, and Wages: Wages Rise with Job Seniority," Journal of Political Economy, University of Chicago Press, vol. 99(1), pages 145-176, February.
    5. Moshe Buchinsky & Denis Fougère & Francis Kramarz & Rusty Tchernis, 2002. "Interfirm Mobility, Wages and the Returns to Seniority and Experience in the U.S," Working Papers 2002-29, Center for Research in Economics and Statistics.
    6. Joseph G. Altonji & Prashant Bharadwaj & Fabian Lange, 2012. "Changes in the Characteristics of American Youth: Implications for Adult Outcomes," Journal of Labor Economics, University of Chicago Press, vol. 30(4), pages 783-828.
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    Cited by:

    1. Rasmus Lentz & Nicolas Roys, 2015. "Training and Search on the Job," Working Papers 2016-25, Federal Reserve Bank of St. Louis.
    2. Jeremy Lise & Fabien Postel-Vinay, 2020. "Multidimensional Skills, Sorting, and Human Capital Accumulation," American Economic Review, American Economic Association, vol. 110(8), pages 2328-2376, August.
    3. Rasmus Lentz & Nicolas Roys, 2015. "Training and Search on the Job," Working Papers 2016-25, Federal Reserve Bank of St. Louis.
    4. Jeremy Lise & Fabien Postel-Vinay, 2020. "Multidimensional Skills, Sorting, and Human Capital Accumulation," American Economic Review, American Economic Association, vol. 110(8), pages 2328-2376, August.

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