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Occupational Reallocation Within and Across Firms: Implications for labor-market polarization

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  • MUKOYAMA Toshihiko
  • TAKAYAMA Naoki
  • TANAKA Satoshi

Abstract

This study analyzes how labor-market frictions interact with firms' decisions to reallocate workers across different occupations during labor-market polarization. We compare the patterns of occupational reallocation within and across firms in the United States and Germany in recent years. We find that within-firm reallocation contributes significantly to the decline in employment in routine occupations in Germany, but much less in the United States. We construct a general equilibrium model of firm dynamics and find that the model with different firing taxes can replicate the difference in firm-level adjustment patterns across these countries. We conduct two counterfactual experiments, highlighting the different roles played by the within-firm cost of reorganizing occupational mix and across-firm frictions created by firing taxes.

Suggested Citation

  • MUKOYAMA Toshihiko & TAKAYAMA Naoki & TANAKA Satoshi, 2023. "Occupational Reallocation Within and Across Firms: Implications for labor-market polarization," Discussion papers 23051, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:23051
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    References listed on IDEAS

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