Occupational Employment Risk and its Consequences for Unemployment Duration and Wages: Working Paper 2007-01

Working Paper
January 1, 2007

Ignez M. Tristao

There are substantial differences in unemployment durations and reemployment outcomes for workers in different occupations. This paper shows that this variation can be explained in part by differences in occupational employment risk that arise from two sources: (1) the diversification of occupational employment across industries, and (2) the volatility of industry employment fluctuations, including sectoral comovements. The analysis combines data from the Quarterly Census of Employment and Wages with the National Longitudinal Survey of Youth 1979 male sample. Applying a competing risk duration model, this analysis finds that unemployed workers in high employment risk occupations have 5.2% lower hazard ratios of leaving unemployment to a job in the same occupation and have 4.9% higher wage losses upon reemployment than workers in low employment risk occupations. Among occupational switchers, workers in higher employment risk occupations have 11% higher wage losses than workers in lower employment risk occupations.