IT skills, occupation specificity and job separations

Abstract

This paper examines how workers’ earnings change after involuntary job separations depending on the workers’ acquired IT skills and the specificity of their occupational training. We categorize workers’ occupational skill bundles along two independent dimensions. First, we distinguish between skill bundles that are more specific or less specific compared to the skill bundles needed in the overall labor market. Second, as digitalization becomes ever more important, we distinguish between skill bundles that contain two different types of IT skills, generic or expert IT skills. We expect that after involuntary separations, these different types of IT skills can have opposing effects, either reducing or amplifying earnings losses of workers with specific skill bundles. We find clearly opposing results for workers in specific occupations—but not in general occupations: Having more generic IT skills is positively correlated with earnings after involuntary separations, whereas more expert IT skills is negatively correlated.