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The Network Origin of Slow Labor Reallocation

Abstract : What explains slow worker reallocation after trade or technological shocks? In this paper, I explore the idea that imperfect skill transferability constrains the reallocation of workers between occupations. I model these frictions as forming a network (the “occupational network”), whose nodes are occupations and whose edges represent the possible occupational transitions. I show that the structure of the occupational network matters for the speed of worker reallocation and I make two contributions. First, I find that this network is very sparse, hinting at large frictions to occupational mobility, and that there exists central bottleneck occupations which can block the reallocation process. Second, I extend the search and matching model of the labor market with an occupational network. I find that asymmetric shocks can generate transition dynamics which are two orders of magnitude slower than in the standard model. Moreover, I show that the intensity of network bottlenecks is a key determinant of slow worker reallocation dynamics after asymmetric shocks. In other words, central occupations have a granular effect on worker reallocation speed.
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Preprints, Working Papers, ...
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Contributor : Caroline Bauer Connect in order to contact the contributor
Submitted on : Friday, June 24, 2022 - 1:24:07 PM
Last modification on : Tuesday, August 2, 2022 - 3:21:18 AM
Long-term archiving on: : Sunday, September 25, 2022 - 8:02:38 PM


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  • HAL Id : halshs-03703862, version 1



Leonard Bocquet. The Network Origin of Slow Labor Reallocation. 2022. ⟨halshs-03703862⟩



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