Sectoral change and implications for occupational mismatch in Spain

Aitor Lacuesta (), Sergio Puente and Ernesto Villanueva

Economic Bulletin, 2012, issue JUL, No 04, 97-105

Abstract: The level of unemployment in an economy depends on a broad set of factors, noteworthy among which are institutional considerations having to do with labour market regulation. This article focuses, however, on the difficulty of the unemployed in meeting the skill requirements of the jobs available. The reason for analysing this issue in the Spanish economy is because, of the more than 2.5 million jobs destroyed since the onset of the crisis, nearly 1.5 million have been in the construction sector, the weight of which in total employment shrank from 13 % in 2007 to 7 % at end-2011. Given that this sector cannot be expected to recoup the same level of activity as in the past, it is important to analyse the future employability of jobless construction workers. In this connection, the economic literature on human capital formation emphasises that the future employability of those who have lost their jobs depends mainly on the specific skills learned during their work experience, and only to a lesser extent on the economic sector in which they worked before they became unemployed. In particular, this literature finds that the type and transferability of workers’ skills plays an important role in explaining the differences in growth between the USA and Europe [Wasmer (2004)], the higher unemployment in Europe than in the USA [Ljungqvist and Sargent (1998)] and the recent growth in wage inequality [Gavilán (2012), Autor and Dorn (2009)]. Following this approach, the present article analyses to what extent the mismatch between the occupations and skills of the employed and unemployed may help to explain the higher unemployment rate in Spain than in the rest of the EU. To do this, we look at the degree of similarity between the past occupations of the unemployed and the newly created ones. The main assumption of the article is that the greater the difference between these occupations, the lower the likelihood of finding a job and, therefore, the greater the significance of the role played by active labour market policies designed to bring the qualifications of the unemployed into line with those required by the labour market. To carry out the work reported here, two alternative methods were used. First, the distribution of occupations in the economy in 2011 was analysed, which enabled us to classify workers into different groups (managers, professionals, technicians, etc.) and to compare this distribution of occupations in employed and unemployed people. The essential assumption in this exercise is that it is more costly to change one’s occupation, even in the same sector, than to work in the same occupation in a different sector. Thus the likelihood that an unemployed person with experience in a certain occupation will find a job rises with increasing number of vacancies in that occupation in any productive sector. The second method assumes a certain labour mobility between occupations, insofar as the specific skills required in different occupations may show some similarity. For example, unemployed persons with experience in a certain occupation and sector requiring contact with the public might find work in a different occupation and/or sector requiring that same skill. In this case, the employment possibilities of a person with past experience in occupations requiring certain skills will increase in proportion to the number of job vacancies requiring that skill, regardless of the sector.

Date: 2012
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