This dissertation research examines the role of occupational human capital in the determination of workers' wages and earnings losses following job displacement. In it, I explain the important role of occupational skills transferability in the labor market. The first chapter develops and estimates the measure of skills transferability applying two approaches. The first approach is based on Shaw's (1984) method, and the second one is based on Ormiston's (2006) method. The main difference between Shaw's (1984) and Ormiston's (2006) approaches is that Shaw's (1984) transferability matrix is a market-based approach, which reflects market as well as technical conditions. In particular, Shaw (1984) estimates skills transferability by examining an actual occupational change, arguing that there will be greater occupational mobility between jobs that have greater rates of skills transferability. On the other hand, Ormiston's (2006) skills transferability is estimated based on the knowledge, skills, and abilities (KSAs) shared across occupations. The accuracy of this estimate will be important for the subsequent two chapters, in which I examine the determinants of workers' wages over the lifecycle and earnings losses due to job displacement.The second chapter studies the effect of occupational human capital on the workers' wages. Unlike previous studies that apply occupational tenure as a proxy for occupational human capital, this chapter applies the concept of Shaw's (1984) occupational human capital to capture the transferability of occupational skills and estimates a new measure of occupational human capital, so-called occupational investment. Using the National Longitudinal Survey of Youth (NLSY) from 1979 to 2000, the key findings of this chapter suggest that occupational skills from previous jobs can also affect workers' wages at the current job and that occupational investment is one of the important sources of wages supporting Shaw's original work on wage determination. Specifically, five years of (3-digit) occupational investment relative to the current occupational tenure could lead to a wage increase of 7 to 16 percent. I also find that the general labor market experience accounts for a large share of workers' wages.The third chapter investigates the role of occupational human capital in explaining variations in earnings losses following job displacement. Unlike previous studies on job displacement, this chapter uses a continuous measure of occupational skills transferability, developed in Chapter 1, to measure the similarity between the pre- and post-displacement occupations of reemployed displaced workers. Using the 2004, 2006, 2008, and 2010 Displaced Worker Survey (DWS), the main finding is that post-displacement earnings losses are highly correlated with the degree of similarity between pre- and post-displacement occupations. Displaced workers who find jobs in occupations similar to their previous jobs suffer smaller earnings losses than those who find less similar occupations. This relationship is non-linear in that higher skills transferability reduces the earnings losses at a decreasing rate.Overall, this dissertation examines the measurement and outcomes of occupational human capital to support the idea that occupational skills are transferable across occupations and that skills transferability can help to explain workers' wages over the lifecycle and earnings losses associated with job displacement.
Read
