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Occupational Reallocation Within and Across Firms: Implications for labor-market polarization

Toshihiko Mukoyama, Naoki Takayama and Satoshi Tanaka

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: This study analyzes how labor-market frictions interact with firms' decisions to reallocate workers across different occupations during labor-market polarization. We compare the patterns of occupational reallocation within and across firms in the United States and Germany in recent years. We find that within-firm reallocation contributes significantly to the decline in employment in routine occupations in Germany, but much less in the United States. We construct a general equilibrium model of firm dynamics and find that the model with different firing taxes can replicate the difference in firm-level adjustment patterns across these countries. We conduct two counterfactual experiments, highlighting the different roles played by the within-firm cost of reorganizing occupational mix and across-firm frictions created by firing taxes.

Pages: 55 pages
Date: 2023-07
New Economics Papers: this item is included in nep-bec, nep-dge, nep-lab and nep-tid
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Handle: RePEc:eti:dpaper:23051