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Out of the frying pan into the fire: displaced workers’ vocational skill specificity, self-employment, and income

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  • Pankaj C. Patel

    (Villanova School of Business, Villanova University)

Abstract

Drawing on vocational specificity and push-based entrepreneurship literature, we ask whether the degree of vocational specificity is linked to the likelihood of displaced workers transitioning into self-employment, whether such transitions correlate with greater earnings declines, and whether self-employment in an industry distant from their pre-displacement industry exacerbates earnings declines. Based on the biennial Current Population Survey-Displaced Worker Supplements (CPS-DWSs) from 1986 to 2020, higher vocational specificity in the pre-displacement occupation is positively associated with odds of switching to self-employment. However, engagement in self-employment is associated with higher earnings losses, that further exacerbate when transitioning to industries more distant from the pre-displacement industry. The findings have implications for policymakers and researchers.

Suggested Citation

  • Pankaj C. Patel, 2024. "Out of the frying pan into the fire: displaced workers’ vocational skill specificity, self-employment, and income," Small Business Economics, Springer, vol. 63(3), pages 1197-1223, October.
    • Handle: RePEc:kap:sbusec:v:63:y:2024:i:3:d:10.1007_s11187-023-00856-1
    DOI: 10.1007/s11187-023-00856-1
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    More about this item

    Keywords

    Displaced workers; Vocational skill specificity; Push-based entrepreneurship;
    All these keywords.

    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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