Author: Carrillo-Tudela, Carlos; Hobijn, Bart; She, Powen; Visschers, Ludo
Organisation: European Economic Review, Volume 84
Published: May 2016
Using quarterly data for the U.K. from 1993 through 2012, we document that the extent of worker reallocation across occupations or industries (a career change, in the parlance of this paper) is high and procyclical. This holds true after controlling for workers׳ previous labour market status and for changes in the composition of who gets hired over the business cycle. Our evidence suggests that a large part of this reallocation reflect excess churning in the labour market. We also find that the majority of career changes come with wage increases. During the economic expansion wage increases were typically larger for those who change careers than for those who do not. During the recession this is not true for career changers who were hired from unemployment. Our evidence suggests that understanding career changes over the business cycle is important for explaining labour market flows and the cyclicality of wage growth.