Worker Reallocation Across Occupations: Confronting Data with Theory

34 Pages Posted: 30 Apr 2015 Last revised: 26 Dec 2017

See all articles by Etienne Lalé

Etienne Lalé

University of Quebec at Montreal (UQAM) - Université du Québec à Montréal; CIRANO; IZA

Date Written: October 1, 2016

Abstract

This paper studies the secular behavior of worker reallocation across occupations in the U.S. labor market. In the empirical analysis, we use microdata to construct consistent time series over a forty-five year period, and document that the fraction of employment reallocated annually across occupations is highly stable in the long run. We go beyond description and use an equilibrium model to identify potential changes in the productivity shocks and mobility costs that govern worker reallocation across occupations. We uncover the joint evolution of these factors by deriving a simple mapping between data and the model. Our analysis shows that constant reallocation rates across occupations mask slow-moving increases in the volatility of productivity shocks since the mid-1980s, and a pronounced upward shift in the cost of switching occupations in the period surrounding the Great Recession.

Keywords: Occupations, Reallocation, Wages, Equilibrium Search

JEL Classification: E24, J21, J31, J62

Suggested Citation

Lalé, Etienne, Worker Reallocation Across Occupations: Confronting Data with Theory (October 1, 2016). Labour Economics, Vol. 44, No. C, 2017. Available at SSRN: https://ssrn.com/abstract=2600173 or http://dx.doi.org/10.2139/ssrn.2600173

Etienne Lalé (Contact Author)

University of Quebec at Montreal (UQAM) - Université du Québec à Montréal ( email )

CP 8888 Succ Centre Ville
Montréal, Québec H3C3P8
Canada

CIRANO ( email )

2020 rue University, 25th floor
Montreal H3C 3J7, Quebec
Canada

IZA ( email )

P.O. Box 7240
Bonn, D-53072
Germany

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