Who recovers from a job loss? The importance of cognitive and non-cognitive skills

Matz Dahlberg (), Linna Martén () and Björn Öckert
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Matz Dahlberg: IFAU - Institute for Evaluation of Labour Market and Education Policy, Postal: Institute for Evaluation of Labour Market and Education Policy, P O Box 513, SE-751 20 Uppsala, Sweden
Linna Martén: Uppsala University, Postal: Uppsala University

No 2021:2, Working Paper Series from IFAU - Institute for Evaluation of Labour Market and Education Policy

Abstract: A well-functioning labor market is characterized by job reallocations, but the individual costs can be vast. We examine if individual’s ability to cope with such adjustments depends on their cognitive and non-cognitive skills (measured by population-wide enlistment tests). Since selection into unemployment is a function of skills, we address the endogeneity of a job loss by exploiting the exogenous labor market shock provided by the military base closures in Sweden following the end of the Cold War. We find that labor earnings decrease and unemployment and social insurance benefits increase for displaced workers. In particular, individuals with high cognitive and, especially, non-cognitive skills face shorter unemployment spells than the individuals with low skills.

Keywords: Cognitive and Non-cognitive skills; Displaced workers; Unemployment; Plant closure; Defense draw down (search for similar items in EconPapers)
JEL-codes: H56 J63 J65 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2021-02-24
New Economics Papers: this item is included in nep-lab
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