Forced displacement and occupational mobility: A skills-based approach

We focus on mobile workers because of forced displacement and study how their occupational skills match skills in other occupations and how this commonality of skills relates to labor outcomes following displacement. Using large-scale register data from Brazil, we find that a higher occupational skills commonality shortens unemployment spells and increases the probability of transiting to another occupation. In addition, event-study analyses show that a one standard deviation increase in our measure of occupational skills commonality leads to a decrease of 1 to 3% in the probability of continuing unemployed after displacement or 10 to 20% of the overall variation in unemployment. However, although facing short periods out of the formal labor market, these individuals do not experience larger wages upon re-employment. Lastly, we explore the impact of skills mismatch on wages and find that transiting to occupations that are more similar in their skills content reduces the adverse effects of displacement.