Inter-industry labor reallocation and task distance

September 30, 2014
Ayako Kondo^*1
Saori Naganuma^*2

Abstract

This paper investigates the factors preventing inter-industry labor reallocation by estimating the determinants of inter-industry worker flow and earnings change after a job change. We find that the difference in required tasks is an important reason for reduction in earnings after an inter-industry job change, and the fear of earnings losses may prevent workers from moving to industries requiring a different set of tasks. Also, more workers switch to industries with which their previous industry had larger transactions, although it affects earnings changes only marginally. On the other hand, industry performance does not affect labor inflow or wage changes significantly for inter-industry job changes. Furthermore, earnings loss associated with a move to a distant industry is not necessarily smaller for workers who are relatively more likely to move to a distant industry.

JEL Classifications
J62, J21

Keywords
inter-industry labor mobility; task specific human capital

*1 Faculty of International Social Sciences, Yokohama National University
E-mail : akondo@ynu.ac.jp
*2 Research and Statistics Department, Bank of Japan
E-mail : saori.naganuma@boj.or.jp

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