The U-shapes of occupational mobility

Frane Groes, Philipp Kircher, Iourii Manovskii

Research output: Contribution to journalArticlepeer-review

Abstract

Using administrative panel data on the entire Danish population we document a new set of facts characterizing occupational mobility. For most occupations, mobility is U-shaped and directional: not only low but also high wage earners within an occupation have a particularly large probability of leaving their occupation, and the low (high) earners tend to switch to new occupations with lower (higher) average wages. Exceptions to this pattern of two-sided selection are occupations with steeply rising (declining) productivity, where mainly the lower (higher) paid workers within this occupation tend to leave. The facts conflict with several existing theories that are used to account for endogeneity in occupational choice, but it is shown analytically that the patterns are explained consistently within a theory of vertical sorting under absolute advantage that includes learning about workers' abilities.
Original languageEnglish
Pages (from-to)659-692
JournalReview of Economic Studies
Volume82
Issue number2
Early online date24 Oct 2014
DOIs
Publication statusPublished - Apr 2015

Keywords

  • occupational mobility
  • learning
  • labor markets
  • sorting
  • comparative and absolute advantage

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