Downskilling: changes in employer skill requirements over the business cycle

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Using a novel database of 82.5 million online job postings, we show that employer skill requirements fell as the labor market improved from 2010 to 2014. We find that a 1 percentage point reduction in the local unemployment rate is associated with a roughly 0.27 percentage point reduction in the fraction of jobs requiring at least a bachelor's degree and a roughly 0.23 percentage point reduction in the fraction requiring five or more years of experience. This pattern is established using multiple measures of labor availability, is bolstered by similar trends along heretofore unmeasured dimensions of skill, and even occurs within firm-job title pairs. We further confirm the causal effect of labor market tightening on skill requirements using a natural experiment based on the fracking boom in the United States as an exogenous shock to the local labor supply in tradable, non-fracking industries. These industries are not plausibly affected by local demand shocks or natural gas extraction technology, but still show fewer skill requirements in response to tighter labor markets. Our results imply this labor market-induced downskilling reversed much of the cyclical increase in education and experience requirements that occurred during the Great Recession. Terms of use: Documents inJEL classifications: D22, E24, J23, J24, J63.

Corporate Hiring under COVID-19: Labor Market Concentration, Downskilling, and Income Inequality

“…This result is in contrast to literature pointing to new-hire upskilling in the aftermath of the Financial Crisis (e.g., Hershbein and Kahn (2018)). It is, however, consistent with reports of accelerated hiring into low-skill occupations during the pandemic and research showing association between unemployment and downskilling (Modestino et al (2016)). 2…”

“…Our study contributes to a growing and important body of work on the economic impact of COVID-19 by providing a granular analysis of firm-specific recruitment activities during the pandemic. 3 It also contributes to the understanding of how the pandemic may affect recent developments in labor markets, including upskilling and downskilling (Autor and Dorn (2013), Modestino et al (2016), Hershbein and Kahn (2018), and Campello et al (2020)), job polarization (Autor (2014) and Jaimovich and Siu (2020)), as well as increasing market concentration (Azar et al (2017) and Benmelech et al (2018)). Our results carry policy implications.…”

Okun Revisited: Who Benefits Most from a Strong Economy?

“…Employers also demanded fewer general skills. This latter finding is confirmed in Modestino et al (2016), who, using job posting data, find that in the immediate aftermath of the Great Recession, employers increased skill requirements listed in job postings, such as education and prior experience, and reduced them as the expansion gathered strength. Devereux (2002) provides evidence that new hires tend to have lower educational attainment when the unemployment rate is low and that low-skilled workers experience the greatest occupational improvement in tight labor markets.…”

How Broadband Internet Affects Labor Market Matching

“…online employment tests) can explain the observed fall in job-to-job mobility in the U.S. Another implication 7 Interestingly, Atasoy (2013) finds a strong association between internet access and employment in the U.S. 8 This is broadly consistent with evidence from survey data or online platforms showing that vacancies postings with higher wages receive more applications (e.g., Wolthoff, 2016 andBanfi &Villena-Roldan, 2018). Other related studies of vacancy posting behavior use survey data (e.g., Holzer et al , 1991, van Ours & Ridder, 1991, Van Ours & Ridder, 1992, Burdett & Cunningham, 1998, Davis et al , 2014, Faberman & Menzio, 2018, or microdata from online job boards (e.g., Barron et al , 1997, Modestino et al , 2016, Hershbein & Kahn, 2018.…”