Occupation-Industry Mismatch in the Cross Section and the Aggregate

Saman Darougheh

Journal of Political Economy Macroeconomics, 2024, vol. 2, issue 3, 375 - 408

Abstract: Occupations that are used in many industries are broad. Workers in broader occupations can respond to adverse shocks to their industry by moving to better-faring industries. This change of industries negatively affects other workers in the destination sector. To quantify the importance of this channel, I build a model that features occupations that are heterogeneous in their broadness. In the model, recessions that affect less broad occupations generate more mismatch. These mismatch-generating recessions affect specialized occupations more than broad occupations. Because of the relocation effect, the aggregate unemployment response is quantitatively similar in both types of recessions.

Date: 2024
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