Research
Research
Working Papers
Skill Obsolescence and the Consequences of Job Loss (Job Market Paper)
Abstract: This paper studies how within-occupation skill obsolescence shapes the consequences of job displacement. I combine NLSY79 work histories with vacancy-text measures of occupational skill demand and classify workers by whether skill-demand changes in their pre-displacement occupations reduced the relative importance of their baseline skills. I distinguish primary-skill exposure, where the worker's strongest skill declines while other dimensions rise, from high exposure, where several skill dimensions decline together. Using a cohort-specific difference-in-differences design, I find that obsolescence changes the character of displacement rather than its length. Displacement causes large first-year earnings and employment losses for all groups, but medium-run employment differences by exposure are small. The main difference is the wage at which workers are re-employed. Highly exposed workers experience persistent conditional hourly wage losses, while primary-skill-exposed and non-exposed workers do not exhibit the same wage scarring. Occupational-adjustment results indicate that this penalty does not appear to be explained by more frequent or larger occupational moves. Instead, high-exposure workers do not experience the improvement in worker--occupation match quality that primary-skill-exposed workers do. The evidence suggests that broad skill obsolescence weakens the transferability or market value of workers' pre-displacement skill bundles after job loss.
Economic Growth and Employment under Innovation Policies
Abstract: This paper studies the impact of innovation policies on productivity growth and unemployment when job matching is frictional. I build a DSGE model of Schumpeterian creative destruction with search-and-matching frictions, featuring two opposing channels: a capitalization effect that spurs vacancy creation and a creative-destruction effect that raises separations. Calibrated to U.S. data (2003–2019), the model evaluates three instruments—direct R&D wage subsidies, incremental R&D tax credits, and corporate profit-tax cuts. Stronger, targeted innovation support raises long-run TFP growth but increases equilibrium unemployment, revealing a transparent growth–unemployment trade-off. Doubling direct subsidies lifts TFP growth by 0.04 percentage points and delivers a 1.5% consumption-equivalent welfare gain; doubling tax credits yields smaller growth and welfare effects but superior cost-effectiveness per fiscal dollar. Broad corporate tax cuts reduce effective R&D incentives, lowering growth and welfare despite slightly lower unemployment.
Worker-Level Exposure to Within-Occupation Skill Obsolescence
Abstract: This paper introduces a worker-level measure of exposure to within-occupation skill obsolescence and uses it to examine how workers' wages and occupational mobility are associated with changing occupational skill demand. The measure combines monthly NLSY79 work histories from 1978 to 2000 with vacancy-text-based measures of occupational skill demand, allowing workers in the same occupation to differ in exposure depending on their baseline cognitive, manual, and interpersonal skill endowments. I distinguish between primary-skill exposure, where the worker's strongest skill becomes less central while other skill dimensions gain importance, and high exposure, where multiple skill dimensions decline in relative importance within the occupation. High exposure is associated with approximately 2 percent lower hourly wages and a higher probability of subsequent occupational switching, while primary-skill exposure is not systematically associated with either outcome. Conditional on switching, high-exposure and primary-exposure workers exhibit smaller wage losses than non-exposed switchers, consistent with selective reallocation. The findings indicate that the breadth of within-occupation skill-demand change, rather than the decline of any single skill dimension, is the relevant margin for understanding worker adjustment to technological change.