Small Employers, Large Employers and the Skill Premium

2021

The Manchester School

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Recent studies document a decline in U.S. labor‐market fluidity from as early as the 1970s on. Making use of the Annual Social and Economic supplement to the Current Population Survey, I uncover a pronounced increase in job‐to‐job mobility from the 1970s to the 1990s, i.e. the annual share of continuously employed job‐to‐job movers rises from 5.9% of the labor force in 1975–1979 to 8.8% in 1995–1999. Job‐to‐job mobility exhibits a downward trend only since the turn of the millennium. In order to provide a formal economic interpretation, I additionally estimate the parameters of the random on‐the‐job search model. Furthermore, I document that job‐to‐job mobility has an unconditional correlation of −0.86 with the unemployment rate at business‐cycle frequencies in 1975–2017, varying by around 3 percentage points over the business cycle.

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confidence: 99%

Trends and cycles in U.S. job mobility

2021

The Manchester School

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“…For instance, entrepreneurs may choose to acquire further skills in order to be more likely to succeed, reducing their probability of becoming unemployed. Provided that entrepreneurs create new job opportunities for others if they succeed, there are positive employment externalities.3 In related work, I study the impact of skills on job mobility(Stijepic 2020b), the trends and cycles in job mobility(Stijepic 2021), and the impact of differences between employers on labor-market outcomes(Stijepic 2016(Stijepic , 2017(Stijepic , 2019.…”

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confidence: 99%

A cross-country study of skills and unemployment flows

2021

J Labour Market Res

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Using an international survey that directly assesses the cognitive skills of the adult population, I study the relation between skills and unemployment flows across 37 countries. Depending on the specifically assessed domain, I document that skills have an unconditional correlation with the log-risk-ratio of exiting to entering unemployment of 0.65–0.68 across the advanced and skill-abundant countries in the sample. The relation is remarkably robust and it is unlikely to be due to reverse causality. I do not find evidence that this positive relation extends to the seven relatively less advanced and less skill-abundant countries in the sample: Peru, Ecuador, Indonesia, Mexico, Chile, Turkey and Kazakhstan.

“… Stijepic () documents the comovement of the skill premium with the differential employer‐size wage premium between high‐ and low‐skill workers in US manufacturing during the postwar era. Most notably, the surge in the skill premium in the 1980s and 1990s coincides with the surge in the differential size premium.…”

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confidence: 99%

Globalization, Worker Mobility and Wage Inequality

Rev International Economics

2016

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In the present paper, I integrate frictional labor markets with on-the-job search into an otherwise standard heterogeneous firm model of intra-industry trade. Most importantly, I show that the returns to workers' inter-firm mobility are higher in a trade equilibrium than in autarky. Intuitively, by favoring large and productive firms, international trade amplifies the disparities in profitability between small and large firms. Hence, the returns to labor reallocation across firms rise. In view of the empirically observed higher interfirm mobility among high-skill workers, this suggests a skill-biased impact of trade liberalization. autarky for a given supply of factor inputs. Intuitively, international trade amplifies the disparities in revenue productivity between small and large firms, and raises, therefore, the efficiency gains resulting from the reallocation of resources from small to large firms. If firms are similar in profitability, the returns from switching firms are low. However, if the disparities between firms are substantial, so will be the returns. Wage differences between worker groups who differ in inter-firm mobility are amplified.The comparative statistics presented in this paper reflect differences in pre-and post-liberalization long-run steady state structures of the economy. This stands in contrast to the literature on specific factors, which analyzes the short-run and medium-run implications of trade liberalization when factors are imperfectly mobile. Loosely speaking, specific factors models focus on the once-and-for-all reallocation of resources. On-the-job search models a la Burdett and Mortensen (1998) stress that-in the presence of allocation shocks-a continuous reallocation of factors is necessary in order to preserve any allocation. Hence, the importance, in the long-run steady state equilibrium, of mobility. While the once-and-for-all modeling of the reallocation process seems appropriate at the industry level, the volatility of employment at the firm level makes such an assumption hard to justify in the case of a disaggregated analysis. 1 This paper is related to a large and influential body of literature that analyzes mechanisms linking trade openness to the skill premium (e.g. Feenstra and Hanson, 1996;Dinopoulos and Segerstrom, 1999;Grossman and Rossi-Hansberg, 2008; Burstein and Vogel, forthcoming). Furthermore, I also contribute to the literature on international trade and within-group wage inequality, which has recently gained momentum (e.g.