The Two Faces of Worker Specialization

Zsofia Barany () and Kerstin Holzheu ()
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Kerstin Holzheu: ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, IZA - Forschungsinstitut zur Zukunft der Arbeit - Institute of Labor Economics, CESifo - Center for Economic Studies and Ifo for Economic Research - CESifo Group Munich

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Abstract: We study how worker specialization—the distance between a worker's skill set and those prevalent in the labor market—shapes employment outcomes. Using US and French data, we first document that specialized jobs are characterized by asymmetric skill profiles and a scarcity of nearby employment opportunities. We incorporate these features into a random search model with multidimensional skills, mismatch penalties and skill complementarity. We show that specialization lowers job-finding rates due to a lack of suitable jobs, but raises re-employment wages via improved productivity. Empirical evidence from displaced workers in both countries confirms these predictions. Our findings reconcile competing views in the literature by showing that specialization entails trade-offs and is neither uniformly beneficial nor harmful.

Keywords: Displacement; Skills; Specialization (search for similar items in EconPapers)
Date: 2025-08-12
Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-04358411v3
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Related works:
Working Paper: The Two Faces of Worker Specialization (2025)
Working Paper: The Two Faces of Worker Specialization (2025)
Working Paper: The Two Faces of Worker Specialization (2023)
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