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Author: Pinheiro, Roberto
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Hernandez Martinez, Victor Holter, Hans Aasnes Pinheiro, Roberto |
The Hedgehog's Curse: Knowledge Specialization and Displacement Loss Working Paper 22-31, Federal Reserve Bank of Cleveland, November 2022. Also: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4273012 Cohort(s): NLSY79, NLSY97 Publisher: Federal Reserve Bank of Cleveland Keyword(s): Cross-national Analysis; Displaced Workers; Earnings; Human Capital; Norway, Norwegian Permission to reprint the abstract has not been received from the publisher. This paper studies the impact of knowledge specialization on earnings losses following displacement. We develop a novel measure of the specialization of human capital, based on how concentrated the knowledge used in an occupation is. Combining our measure with individual labor histories from the NLSY 79-97 and Norway's LEED, we show that workers with more specialized human capital suffer larger earnings losses following exogenous displacement. A one standard deviation increase in pre-displacement knowledge specialization increases the earnings losses post-displacement by 3 to 4 pp per year in the US, and by 1.5 to 2 pp per year in Norway. In the US, the negative effect of higher pre-displacement knowledge specialization on post-displacement earnings is driven by the negative impact of knowledge specialization on well-paid outside opportunities. By contrast, this association between outside opportunities and knowledge specialization plays no role in post-displacement earnings losses in Norway, where the negative effect of specialization is in part explained by its association with the routine content and the offshoring probability of the occupation. |
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Bibliography Citation
Hernandez Martinez, Victor, Hans Aasnes Holter and Roberto Pinheiro. "The Hedgehog's Curse: Knowledge Specialization and Displacement Loss." Working Paper 22-31, Federal Reserve Bank of Cleveland, November 2022. |