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The employment shift from occupations in the middle of the skill distribution towards those at the high and low ends is one of the most important trends to affect the US labor market over the past 30 years. Previous research has suggested that a primary driver of this job polarization is routine-biased technological change (RBTC) whereby new technologies substitute for middle-skill jobs and complement high-skill cognitive jobs. However a long theoretical literature suggests that adjustments to technological change may be more episodic. Whether adjustments to new technology are gradual or sudden is important for policy and understanding economic recovery. If adjustments are sudden and concentrated in downturns, large numbers of displaced workers may be left with the wrong skills for new modes of production.

This article highlights findings from a recent working paper (Hershbein and Kahn 2016) that investigates how the demand for skills in the US labour market changed during and after the Great Recession. It uses nearly all electronically posted job vacancies in 2007 and 2010-2015 collected by the analytics company Burning Glass Technologies and spatial variation in economic conditions. This evidence showed that skill requirements in job vacancy postings differentially increased in metropolitan statistical areas (MSAs) that were hit hard by the Great Recession, relative to less hard-hit areas, and that these differences across MSAs persist through the end of 2015. The increases are prevalent within occupations, more pronounced in the non-traded sector, driven by both within-firm upskilling and substitution from older to newer firms, accompanied by increases in capital stock, and are evident in realized employment. We argue that this evidence reflects the restructuring of production toward more skilled workers and routine-labor saving technologies, and that the Great Recession accelerated this process.

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This paper investigates the incidence and adjustment experiences of Australian workers who are displaced by economic change. Worker displacement can be the result of market based factors (e.g. changes in technology or consumer tastes) or policy changes (e.g. tariff reductions and deregulation). Evidence suggests that market based factors are responsible for most changes in the structure of Australian employment. However, when workers are displaced by policy reforms, they may experience some of the associated adjustment costs, such as periods of unemployment and a fewer working hours or lower wages once re-employed. These factors can influence the distribution of the costs and benefits and overall net benefits of policy reforms. The paper: clarifies what is meant by the term displaced worker; discusses the potential adjustment costs associated with displacement; quantifies the relative importance of job displacements in Australia; summarises past research on the incidence and adjustment experiences of displaced workers; provides a descriptive analysis of Australian data; uses econometric techniques to test the potential relationships between the incidence and adjustment experiences of retrenched workers and individual characteristics such as education and gender; and summarises the key findings of the study and discusses their implications for future policy reforms. Show less

It is too early to know how many Canadian workers will lose their job, i.e. will be permanently laid-off, as a result of the [Coronavirus Disease 2019] COVID-19 pandemic and what will happen to them financially after job loss. Yet a number of stylized facts emerge from the past. While these facts do not necessarily allow accurate predictions of the impact of the pandemic on job displacement, they provide a long-term perspective from which forthcoming labour market developments can be assessed. The goal of this article is to highlight these facts.

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In a rapidly changing world of work, adults in Australia are being challenged to upskill, retrain and consider alternative career paths. Mid-career adults are in a unique position: they have acquired considerable skills and work experience but still have many years left in the labour market before retirement. They thus may need help to build on their existing skills to progress but have time before retirement to recoup their training investments. If well designed, career guidance can facilitate employment transitions for this group and usefully inform their training choices.

This report assesses the career guidance services that are currently available to mid-career adults in Australia and puts them into an international perspective. New online survey data shows Australia performs well in OECD comparison with respect to the use of career guidance services, but there is room to strengthen the inclusiveness of these services and to tailor them to the needs of mid-career adults. The report provides concrete recommendations in this regard: (1) strengthen co-ordination of career guidance for mid-career adults; (2) support mid-career adults facing job disruption or job transition; (3) support mid-career adults who are unemployed or out of the labour force; and (4) support mid-career adults who are employed and looking to progress in their current job/sector.

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[Coronavirus Disease 2019] COVID-19 is likely to leave long-lasting effects on local labour markets. It is accelerating a pre-existing trend towards automation, as firms look even more to new technologies to pandemic proof their operations. While automation offers the opportunity to boost productivity, it can also lead to job polarisation as vulnerable workers who lose their jobs may not have the skills needed in a changing labour market. This OECD report examines the potential impacts of automation on people and places across Australia. It also sheds light on policies and programmes that can help regions and cities to prepare for the future of work.

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This report is an analysis of the industrial profiles of Mackay, Central Queensland and the Hunter Valley. It reveals that forcing workers in the coal mining sector out of their jobs, without ensuring alternative employment with similar wages and benefits, would have devastating consequences for those local economies. The report argues that the government must act to create new, reliable, well-paid jobs for regional workers. Also needed are appropriate industry policies to guide economic development, skills and training opportunities for workers of all ages, and support for emerging industries to underpin the future economies of regional Australia.

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Workers who experience a permanent layoff (a job loss not followed by rejoining the same firm in the current or subsequent year) are often affected financially for several years. Research has consistently shown that following a permanent layoff, earnings tend to decline sharply and remain below pre-layoff levels for several years. One approach to dealing with a permanent layoff is to reinvest in human capital by going back to school before returning to the labour market. Recent evidence suggests that only a small share of recently displaced workers enrol in postsecondary education, and among those who do, most tend to select short-term (i.e., non-degree), career-oriented programs or take a few credits that are not associated with a credential or program. This pattern may reflect the fact that many displaced workers may need to (and are able to) re-enter the workforce as soon as possible to pay bills and care for dependants. The current study, based on the Longitudinal Worker File, the Postsecondary Student Information System, the 2006 Census of Population and the T1 Family File, examines the extent to which enrolling in, or graduating from, short, career-oriented programs or taking independent credits is associated with more favourable post-displacement earnings patterns.

The findings suggest that, compared with individuals who did not enrol in postsecondary education following a permanent layoff, individuals who graduated from a college or [Quebec's College d'enseignement general et professionnel (College of General and Vocation Education)] CEGEP certificate or diploma program after a job loss registered substantially larger percentage increases in annual earnings between one year before the layoff and five years after the layoff. The relative earnings increases were particularly large among individuals who graduated from short science, technology, engineering and mathematics (STEM) or health care programs. More moderate relative increases in earnings were registered by individuals who took independent credits. In contrast, graduates from a short non-STEM (except health care) program or a microcredential (a short program requiring only a small number of courses) after a job loss experienced no relative earnings gains. Graduates of microcredentials registered substantial earnings losses compared with individuals who did not enrol at all. Finally, displaced workers who enrolled in a short program from which they did not graduate experienced similar earnings trajectories as those who did not enrol at all.

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Job displacement (involuntary job loss due to firm closure or downsizing) affects many workers over their lifetime. Displaced workers may face long periods of unemployment and, even when they find new jobs, tend to be paid less and have fewer benefits than in their prior jobs. Helping them get back into good jobs quickly should be a key goal of labour market policy. This report is [part of] a series of reports looking at how this challenge is being tackled in a number of OECD countries. It shows that Denmark has effective policies in place to quickly assist people who are losing their jobs, in terms of both providing good re-employment support and securing adequate income in periods of unemployment. Despite a positive institutional framework, a sound collaboration between social partners and a favourable policy set-up, there is room to improve policies targeted to displaced workers as not every worker in Denmark can benefit from the same amount of support. In particular, workers affected by collective dismissals in larger firms receive faster and better support than those in small firms or involved in small or individual dismissals. Blue-collar workers are also treated less favourably than white-collar workers. More generally, low-skilled and older displaced workers struggle most to re-enter the labour market.

Published abstract reprinted by permission of the copyright owner.

The contents are as follows: Job displacement in Denmark and its consequences; The Danish flexicurity model and institutional setup; Job displacement prevention and early intervention policies in Denmark; Income support as a safety net for displaced workers in Denmark; Effective re-employment support for displaced workers in Denmark. Show less

Large and persistent earnings losses following displacement have adverse consequences for the individual worker and the macroeconomy. Leading models cannot explain their size and disagree on their sources. Two mean-reverting forces make earnings losses transitory in these models: search as an upward force allows workers to climb back up the job ladder, and separations as a downward force make non-displaced workers fall down the job ladder. [The authors] show that job stability at the top rather than search frictions at the bottom is the main driver of persistent earnings losses. [They] provide new empirical evidence on heterogeneity in job stability and develop a life-cycle search model to explain the facts. [The authors'] model offers a quantitative reconciliation of key stylized facts about the US labor market: large worker flows, a large share of stable jobs, and persistent earnings shocks. [They] explain the size of earnings losses by dampening the downward force. [This] new explanation highlights the tight link between labor market mobility and earnings dynamics.

Regarding the sources, [the authors] find that over 85 per cent stem from the loss of a particularly good job at the top of the job ladder. [They] apply the model to study the effectiveness of two labor market policies, retraining and placement support, from the Dislocated Worker Program. [The authors] find that both are ineffective in reducing earnings losses in line with the program evaluation literature.

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This study proposes an experimental methodology to estimate the monetary cost of the training needed to move workers across occupations. Occupations of destinations are considered 'acceptable' if they are relatively close, in terms of skills requirements, to those characterising the occupation of origin; and entail small wage cuts for workers (of up to 10 per cent) and small skills excesses relative to the occupation of origin, if any. The estimated training cost encompasses the direct cost of undertaking the training spell in the education and training system itself, and the worker's opportunity cost in terms of foregone wages for the duration of the training. The country-level minimum cost of moving workers in occupations at high risk of automation (on average, 14 per cent of the labour force) to occupations where they are not at such risk (so called 'safe haven') is estimated to range between 1-5 per cent of one year GDP, on average across the countries considered. At the individual worker level, costs of transitions are found to increase with: (1) the cognitive skills of workers in the occupation of origin; (2) the proportion of workers at high risk of automation in the manufacturing sector; and (3) the average age of workers in the occupation.

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