Inter-industry labor reallocation and task distance

Ayako Kondo, Saori Naganuma

Abstract

This paper investigates factors preventing inter-industry labor reallocation by estimating the determinants of inter-industry worker flow and earnings change after a job change. We find that the difference in required tasks is an important reason for earnings reduction after an inter-industry job change, and thus, workers may hesitate to move to industries requiring a different set of tasks for fear of losing the wage premium acquired by task-specific human capital. In addition, more workers switch to industries with which their previous industry had larger transactions, although it affects earnings changes only marginally. On the other hand, industry performance does not affect labor inflow or wage changes significantly for inter-industry job changes. Young men, less educated women, and those quitting previous jobs for family or health reasons are more likely to move to industries requiring a different set of tasks, and young individuals who lost their jobs involuntarily are less likely to do so. Individuals more likely to move are not necessarily those whose earnings loss associated with the move is small: earning losses associated with task distance are relatively small among younger and less educated workers and are uncorrelated with the reasons for quitting the previous job.

Original languageEnglish
Article number910
Pages (from-to)127-147
Number of pages21
JournalJournal of the Japanese and International Economies
Volume38
DOIs
StatePublished - 2015 Dec 1

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move
worker
job change
labor
job
wage
allocation
individual
premium
human capital
transaction
determinants
anxiety
man
health
family
woman
performance

Keywords

  • Inter-industry labor mobility
  • Task specific human capital

ASJC Scopus subject areas

  • Economics and Econometrics
  • Finance
  • Political Science and International Relations

Cite this

Inter-industry labor reallocation and task distance. / Kondo, Ayako; Naganuma, Saori.

In: Journal of the Japanese and International Economies, Vol. 38, 910, 01.12.2015, p. 127-147.

Research output: Contribution to journalArticle

Kondo, Ayako; Naganuma, Saori / Inter-industry labor reallocation and task distance.

In: Journal of the Japanese and International Economies, Vol. 38, 910, 01.12.2015, p. 127-147.

Research output: Contribution to journalArticle

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AB - This paper investigates factors preventing inter-industry labor reallocation by estimating the determinants of inter-industry worker flow and earnings change after a job change. We find that the difference in required tasks is an important reason for earnings reduction after an inter-industry job change, and thus, workers may hesitate to move to industries requiring a different set of tasks for fear of losing the wage premium acquired by task-specific human capital. In addition, more workers switch to industries with which their previous industry had larger transactions, although it affects earnings changes only marginally. On the other hand, industry performance does not affect labor inflow or wage changes significantly for inter-industry job changes. Young men, less educated women, and those quitting previous jobs for family or health reasons are more likely to move to industries requiring a different set of tasks, and young individuals who lost their jobs involuntarily are less likely to do so. Individuals more likely to move are not necessarily those whose earnings loss associated with the move is small: earning losses associated with task distance are relatively small among younger and less educated workers and are uncorrelated with the reasons for quitting the previous job.

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