Job Polarization, Skill Mismatch and the Great Recession

67 Pages Posted: 23 Jul 2017 Last revised: 30 Jan 2020

Multiple version iconThere are 2 versions of this paper

Date Written: January 1, 2020

Abstract

This paper shows that job polarization has a persistent negative effect on employment opportunities, labor mobility and skill-to-job match quality for mid/low-skilled workers, in particular during downturns. I introduce a model generating an endogenous mapping between skills and jobs, that I estimate to match solely occupational dynamics during the Great Recession, a major episode of polarization. Yet, this is sufficient for the model to replicate well the reallocation patterns of all workers on the job ladder and the mismatch dynamics observed in the data. Comparison with the planner solution reveals that 1/4 of mismatches is efficient and attenuates polarization and unemployment over the cycle.

Keywords: job polarization, business cycle, skill demand and supply

JEL Classification: E24, E32, J21, J24, J62, O33

Suggested Citation

Zago, Riccardo, Job Polarization, Skill Mismatch and the Great Recession (January 1, 2020). Available at SSRN: https://ssrn.com/abstract=3004759 or http://dx.doi.org/10.2139/ssrn.3004759

Riccardo Zago (Contact Author)

Banque de France ( email )

Paris
France

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