Full Citation
Title: What explains low-skilled unemployment? A new approach using occupational hiring and laying off probabilities
Citation Type: Conference Paper
Publication Year: 2014
ISBN:
ISSN:
DOI:
NSFID:
PMCID:
PMID:
Abstract: The large difference in the unemployment rates of high and low skilled workers is an important yet poorly understood phenomenon. This paper proposes a novel method to helpdistinguish between competing explanations of this difference: I compute monthly job loss and job finding probabilities in detailed occupations between 1978 and 2012 and I formally compute their contribution to the cross-sectional variation in occupational unemployment. I find a surprising asymmetry: Even though hiring probabilities are strongly procyclical (it is harder to find jobs in recessions), the cross occupational differences in hiring rates are very small. In fact, occupational differences in layoff - rather than hiring - probabilities entirely explain the large cross sectional heterogeneity in occupational unemployment. Then, using a calibrated search and matching model I investigate what exogenous parameterscan account for the observed occupational turnover differences: a mismatch between firms demand and workers supply of skills; UI benefits; skill specific productivity shocks, bargaining power and various adjustment cost differences across skill groups. Most parameters predict occupational differences in hiring that are too large to match the data. Most importantly, skill mismatch and the level of UI benefits are unlikely to have a large contribution to occupational unemployment. Three parameters, however, predict occupational turnover probabilities that are roughly in line with those in the data: 1) the amount of firm specific skills; 2) layoff cost of experienced workers; and 3) the variance of idiosyncratic productivity shocks. The contribution of these parameters to cross occupational unemployment differences, however, is not identified from the turnover data.
Url: http://legacy.iza.org/conference_files/SUMS_2014/viewProgram?conf_id=2540
User Submitted?: No
Authors: Hudomiet, Peter
Conference Name: 17th IZA European Summer School in Labor Economics
Publisher Location: Buch/Ammersee, Germany
Data Collections: IPUMS USA
Topics: Labor Force and Occupational Structure
Countries: