Specialists or generalists? Cross-industry mobility and wages

Justine Hervé

Labour Economics, 2023, vol. 84, issue C

Abstract: This paper quantifies the association between industrial specialization at the occupation level and job mobility and earnings for low and middle-wage American workers. I propose the concept of industry specificity to capture the degree of industrial specialization of a worker's occupation. I measure industry specificity using an index of industrial concentration of employment (CEI) defined at the occupation-state-year level. Linking this index to individual-level panel data on wages and job transitions, I show that CEI is negatively associated with workers' wages: moving from the first quartile to the third quartile of industry specificity decreases wages by 13 percent. I next examine the mechanisms that explain these findings. I first find that CEI is negatively associated with cross-industry and cross-occupation mobility, that is, workers employed in industry-specific occupations change industry and occupation less frequently than workers in less specific occupations. In addition, I show that occupation-level factors such as skill uniqueness and automatability increase industry specificity; but they cannot entirely explain the negative effect of CEI on wages. Finally, in line with the main results, I provide suggestive evidence that workers in industry-specific occupations are more vulnerable to industry-wide wage shocks compared to their generalist counterparts.

Keywords: Industry Specificity; Wages; Cross-Industry Job Mobility; Mobility Costs; Labor Market Frictions (search for similar items in EconPapers)
JEL-codes: E24 J31 J62 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:labeco:v:84:y:2023:i:c:s0927537123000660

DOI: 10.1016/j.labeco.2023.102391

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