Skill Remoteness and Post-Layoff Labor Market Outcomes

Local skill remoteness captures the dissimilarity between the skill profiles of a worker’s last job and other jobs in a local labor market. Higher skill remoteness at layoff is associated with persistently lower earnings after layoff, a higher probability of changing occupation, a lower probability of being reemployed at jobs with similar skill profiles, and a higher propensity to migrate. Jobs destroyed in recessions are also more skill remote than those lost in booms. The local skill remoteness of jobs is an empirically relevant factor to explain the severity and cyclicality of displaced workers’ earnings losses and reallocation patterns. (JEL E24, E32, J24, J31, J61, J63, R23)