Job Polarization, Skill Mismatch and the Great Recession
67 Pages Posted: 23 Jul 2017 Last revised: 30 Jan 2020
Date Written: January 1, 2020
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
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