Occupational Reallocations within and across Firms: Implications for the Labor-Market Polarization; Satoshi Tanaka (The University of Queensland)

Abstract

This paper analyzes how labor-market frictions interact with firms’ decisions of reallocating workers across different occupations during the process of labor-market polarization. First, using two datasets in the US, we measure occupational reallocations within and across firms over the recent years. Second, we compare the patterns of occupational reallocations within and across firms between the US and Germany. We show that within-firm reallocations contribute significantly to the decline of employment in routine occupations in Germany, whereas the corresponding contribution is significantly small in the US. This outcome is consistent with the fact that firing restrictions are stronger in Germany. Third, we construct a general equilibrium model of firm dynamics and quantitatively analyze the impact of firing costs on the patterns of occupational reallocations and macroeconomic outcomes.