Untethering from Industry Decline: Occupation-Specific Human Capital and Labor Mobility

The changing structure of occupations, including the decades-long decline of manufacturing jobs, and the erosion of routine and manual jobs, has the potential to destroy occupation-specific human capital. Earnings losses for displaced workers in declining fields may be particularly large for those who are unable to use their occupation-specific capital in an alternative occupation. This project introduces new time-varying measures of occupational similarity, based on the text content of over 50 years of job ads, to understand whether (i) earnings losses from unemployment are smaller for workers who have close available occupational substitutes or who switch to occupations with a high degree of similarity; and (ii) the gradient of earnings losses with respect to pre- displacement tenure is weakened by switching to a similar occupation. The results are important for the design of government programs aimed at helping workers displaced from jobs in declining sectors. A final contribution of this paper is to develop a dataset with pairwise SOC similarity scores in skill and task space, which can be used to study labor market adjustments to technology and trade