The Hedgehog’s Curse: Knowledge Specialization and Displacement Loss

Victor Hernandez Martinez, Hans Holter and Roberto Pinheiro

No 22-31, Working Papers from Federal Reserve Bank of Cleveland

Abstract: This paper studies the impact of knowledge specialization on earnings losses following displacement. We develop a novel measure of the specialization of human capital, based on how concentrated the knowledge used in an occupation is. Combining our measure with individual labor histories from the NLSY 79-97 and Norway’s LEED, we show that workers with more specialized human capital suffer larger earnings losses following exogenous displacement. A one standard deviation increase in pre-displacement knowledge specialization increases the earnings losses post-displacement by 3 to 4 pp per year in the US, and by 1.5 to 2 pp per year in Norway. In the US, the negative effect of higher pre-displacement knowledge specialization on post-displacement earnings is driven by the negative impact of knowledge specialization on well-paid outside opportunities. By contrast, this association between outside opportunities and knowledge specialization plays no role in post-displacement earnings losses in Norway, where the negative effect of specialization is in part explained by its association with the routine content and the offshoring probability of the occupation.

Keywords: Earnings Loss; Knowledge Specialization; Unemployment; Human Capital (search for similar items in EconPapers)
JEL-codes: J31 J62 J63 (search for similar items in EconPapers)
Pages: 80
Date: 2022-11-09
New Economics Papers: this item is included in nep-hea, nep-knm and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.26509/frbc-wp-202231 Full Text (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedcwq:95007

Ordering information: This working paper can be ordered from

DOI: 10.26509/frbc-wp-202231

Access Statistics for this paper

More papers in Working Papers from Federal Reserve Bank of Cleveland Contact information at EDIRC.
Bibliographic data for series maintained by 4D Library ().