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This paper examines the effect of accumulated human capital, and particularly occupational human capital, on the earnings losses of displaced workers. Unlike most of the previous studies of job displacement, this paper uses a continuous measure of occupational skills transferability to measure the similarity between the pre- and post-displacement occupations of reemployed displaced workers. Using the 2004, 2006, 2008, and 2010 Displaced Worker Survey (DWS), the main finding is that post-displacement earnings losses are highly correlated with the degree of similarity between pre- and post-displacement occupations. Displaced workers who find jobs in occupations similar to their previous jobs suffer smaller earnings losses than those who find less similar jobs. This relationship is non-linear in that higher skills transferability reduces the earnings losses at a decreasing rate as the transferability of occupational skills increases.

zeitschrift für arbeitsmarktforschung/journal for labour market research

Occupational human capital and earnings losses of displaced workers: does the degree of similarity between pre- and post-displacement occupations matter?