The Distributional Impacts of Worker Reallocation: Evidence from Europe
IMF Working Papers, June 24, 2022
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- The Distributional Impacts of Worker Reallocation: Evidence from Europe
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Bibliographic details
- Authors: John C Bluedorn, Francesca Caselli, Niels-Jakob H Hansen, Ippei Shibata, Marina Mendes Tavares
- Published: June 24, 2022
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400212512.001
Summary
- Using individual-level data for 30 European countries between 1983 and 2019, the paper documents the extent and earning consequences of workers’ reallocation across occupations and industries and how these outcomes vary with individual-level characteristics: (i) education, (ii) gender, and (iii) age.
- Key overall finding: young workers are more likely to experience earnings gains with on-the-job sectoral and occupational switches, while low-skilled workers’ employment transitions are associated with an earnings loss.
- The observed differences in earnings gains and losses mask a high degree of heterogeneity related to trends in routinization.
- Specific recession-related finding: workers, particularly low-skilled and older workers during recessions, experience a severe earning penalty when switching occupations from non-routine to routine occupations.
Data and Scope
- Sample: individual-level data for 30 European countries.
- Time frame: between 1983 and 2019.
- Publication metadata: Pages: 24; Volume: 2022; Issue: 124; Series: Working Paper No. 2022/124; DOI: https://doi.org/10.5089/9798400212512.001; Stock No: WPIEA2022124; ISBN: 9798400212512; ISSN: 1018-5941.
Main Findings — Earnings Consequences of Reallocation
- Young workers:
- More likely to experience earnings gains with on-the-job sectoral and occupational switches.
- Low-skilled workers:
- Employment transitions are associated with an earnings loss.
- Age heterogeneity:
- Older workers during recessions face severe earning penalties when switching occupations from non-routine to routine occupations.
- Routinization effects:
- Trends in routinization generate substantial heterogeneity in earnings gains and losses across worker groups.
- Gender:
- Variation by gender is one of the examined dimensions (listed among individual-level characteristics studied).
Policy-relevant Implications (as implied by findings)
- Tailored support for low-skilled workers undergoing employment transitions, given their association with earnings losses.
- Targeted assistance for older workers, especially during recessions, to prevent severe earning penalties when occupational switching involves moves toward routine occupations.
- Consideration of routinization trends in designing labor market policies to address heterogeneous distributional impacts.
John C Bluedorn, Francesca Caselli, Niels-Jakob H Hansen, Ippei Shibata, and Marina Mendes Tavares. "The Distributional Impacts of Worker Reallocation: Evidence from Europe", IMF Working Papers 2022, 124 (2022).
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