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Title: Understanding the Decline in Occupational Mobility

Citation Type: Miscellaneous

Publication Year: 2018

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Abstract: The process of workers switching from occupation to occupation is a vital part of career development and self-discovery. Using the CPS and SIPP I show that occupational switching rates have declined significantly over the past 25 years. This decline has been robust for each consecutive cohort and it is more pronounced for younger workers than older workers. The decline could imply that it is becoming more diffi- cult/costly for workers to find better jobs (increases in switching costs), leaving people increasingly stuck in poorly-matched and unfulfilling careers. Paradoxically, it could also mean finding better jobs is becoming easier (due to advances in ICT), since workers in good matches are less likely to switch. This paper develops a dynamic discrete choice lifecycle model to separately identify and quantify how changes in switching costs and information over time contribute to the observed declines in occupation switching. The result is that increased switching costs drive about 72% of the decline while better information drives about 8%. The increases in switching costs have decreased average lifetime welfare for workers who enter the labor market in 2003 by roughly $35,000 per person. The total aggregate labor income loss due to high switching costs from 1993 to 2013 is $292 billion dollars.

Url: http://conference.iza.org/conference_files/WoLabConf_2018/xu_m26327.pdf

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Authors: Xu, Ming

Publisher: University of Minnesota

Data Collections: IPUMS USA

Topics: Labor Force and Occupational Structure

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