Out of the frying pan into the fire: displaced workers’ vocational skill specificity, self-employment, and income

Pankaj C. Patel ()
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Pankaj C. Patel: Villanova School of Business, Villanova University

Small Business Economics, 2024, vol. 63, issue 3, No 14, 1197-1223

Abstract: Abstract Drawing on vocational specificity and push-based entrepreneurship literature, we ask whether the degree of vocational specificity is linked to the likelihood of displaced workers transitioning into self-employment, whether such transitions correlate with greater earnings declines, and whether self-employment in an industry distant from their pre-displacement industry exacerbates earnings declines. Based on the biennial Current Population Survey-Displaced Worker Supplements (CPS-DWSs) from 1986 to 2020, higher vocational specificity in the pre-displacement occupation is positively associated with odds of switching to self-employment. However, engagement in self-employment is associated with higher earnings losses, that further exacerbate when transitioning to industries more distant from the pre-displacement industry. The findings have implications for policymakers and researchers.

Keywords: Displaced workers; Vocational skill specificity; Push-based entrepreneurship (search for similar items in EconPapers)
JEL-codes: J01 L26 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s11187-023-00856-1

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