Aggregate Worker Reallocation and Occupational Mobility in the United States: 1976-2000

We investigate the evolution and the sources of aggregate employment reallocation in the United States in the 1976-2000 March files of the Current Population Survey. We focus on the annual flows of male workers across occupations at the Census 3-digit level, the finest disaggregation at which a moving worker changes career and relocates to an observationally different technology. The total reallocation of employment across occupations is strongly procyclical and mildly declining until the early 1990s, and then relatively flat. The negative trend is entirely due to younger workers, as it is reversed for men over age 40. To reveal the sources of these patterns, while correcting for possible worker selection into employment, we construct a synthetic panel based on birth cohorts, and estimate various models of worker occupational mobility. We find that the cross-occupation dispersion in labor demand, as measured by an index of net employment reallocation, has a strong association with total reallocation. The demographic composition of employment, more specifically the increasing average age and college attainment level, explains some of the trend and cycles in worker flows. High unemployment reduces the level of mobility directly. However, more strikingly, the level of unemployment also influences the magnitude and the sign of the education effect. As predicted by job-matching theory, occupational mobility has residual persistence, so shocks to aggregate employment reallocation propagate through time. Finally, cohorts born after the mid-1950's have increasingly low occupational mobility beyond what can be explained by their observable characteristics