In this project, we study the dynamic effects of worker specialization to a job. Worker’s specialization occurs on the job and describes the falling range and increasing depth of a workers’ skills with tenure/experience, i.e. the growing adaptation of a worker to a job. Specialization can amplify business cycles in two ways. First, after a positive productivity shock that increases worker tenure, continued specialization amplifies job match productivity by increasing the fit between a worker and her firm. Secondly, after a negative productivity shock that creates job match dissolution, prior specialization reduces job finding rates due to a more extreme skill portfolio. In this research project, we aim at studying the aggregate importance of these effects for the economy.
Data provided through CASD (9)