The skill overlap between growing and declining jobs, and how it matters for people who move between

Abstract

As rapid technological, environmental, and demographic transformations are quickly reshaping skill demand and supply, the smooth adaptation of labour markets hinges increasingly on effective labour re-allocation from declining to growing jobs. In dominating narratives, such re-deployment optimally happens through switches between jobs that are related in terms of the skills they require. On a rapidly changing job market, however, are not large chunks of human capital quickly becoming obsolete, causing workers from declining jobs to be better off by moving into completely new jobs and accepting the transition into fresh-vintage skill domains? Addressing the tension between re-training for new growing jobs and making the most of already acquired skills, this paper applies recently developed techniques to assess skill overlaps between declining and growing jobs in Sweden 2016-2020, and how these overlaps influence the direction of job switches and their economic consequences for workers. We measure skill relatedness based on millions of job postings, capturing the skills at a fine-grained industry-occupation combination level. While research typically analyses the fate of workers in declining jobs, we focus on the twin question of wherefrom the workers are sourced into growing jobs. Contrary to prevailing assumptions, we find that skill overlap between declining and growing jobs is not significantly different from other job segments. Labour market (re-)entrants are a larger source of inflow than declining jobs. Most transitions to growing jobs are skill-related. However, wage gains from related moves are concentrated among high-earners, while low-paid workers often benefit more from unrelated job transitions. These findings challenge the dominant narrative that switches to skill-related jobs are always optimal and highlight the importance of supporting broader, sometimes unrelated, career shifts through lifelong learning.