Worker specialization and the consequences of occupational decline

Simon Ek ()
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Simon Ek: IFAU - Institute for Evaluation of Labour Market and Education Policy

No 2025:7, Working Paper Series from IFAU - Institute for Evaluation of Labour Market and Education Policy

Abstract: Are workers with poor outside opportunities less responsive and more susceptible to negative demand shifts in routine occupations? To answer this, I create and estimate an occupation specialization index (OSI) using Swedish register data and machine Learning tools. It measures the expected utility difference between a worker’s occupation and his best outside option. This determines the loss he is willing to tolerate to avoid switching. Low-OSI generalists disproportionately left routine work. Their future wage growth was comparable to similar workers initially in non-routine occupations. By contrast, routine specialists largely stayed put and experienced lower wage growth than generalists and non-routine specialists.

Keywords: Multidimensional skills; Occupational structure changes (search for similar items in EconPapers)
JEL-codes: J23 J24 J31 J62 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2025-05-26
New Economics Papers: this item is included in nep-lma
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:ifauwp:2025_007

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