The Two Faces of Worker Specialization

Zsofia Barany and Kerstin Holzheu

No 18320, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: In this paper, we study whether skills can be both an asset and a liability. We show that the accumulation of specialized skills not only increases the return to a specific activity but it also increases the exposure to labor market risks. Specialized workers, once displaced, might take longer to find a job, as their specialized skills might make them less productive across jobs on average. Yet, once they find a suitable job, that job is likely to be better matched to their skills, increasing job stability and entry wages. We empirically verify this hypothesis using displacement events in French and US data and find evidence for these links.

Keywords: Specialization; Skills; Displacement (search for similar items in EconPapers)
JEL-codes: J24 J41 J63 J64 (search for similar items in EconPapers)
Date: 2023-07
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