Transferability of Skills across Sectors and Heterogeneous Displacement Costs

Moises Yi; Steffen Mueller; Jens Stegmaier

doi:10.1257/aer.p20171024

Transferability of Skills across Sectors and Heterogeneous Displacement Costs

Moises Yi¹; Steffen Mueller²; Jens Stegmaier³

¹ Center for Economic Studies, US Census Bureau, 4600 Silver Hill Road, Suitland, MD 20746 (e-mail: ). · ² Halle Institute for Economic Research (IWH), Kleine Märkerstr. 8, 06108 Halle, Germany (e-mail: ) · ³ Institute for Employment Research, Regensburger Str. 104, 90478 Nuremberg, Germany (e-mail: )

American Economic Review 2017 open access

We use rich German administrative data to estimate new measures of skill transferability between manufacturing and other sectors. These measures capture the value of workers' human capital when applied in different sectors and are directly related to workers' displacement costs. We estimate these transferability measures using a selection correction model, which addresses workers' endogenous mobility, and a novel selection instrument based on the social network of workers. Our results indicate substantial heterogeneity in how workers can transfer their skills when they move across sectors, which implies heterogeneous displacement costs that depend on the sector to which workers reallocate.

DOI: 10.1257/aer.p20171024
Volume: 107 (5)
Pages: 332-336
Language: en
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