Essays in Occupation Skill Characteristics

My dissertation consists of three chapters in the area of labor economics. The first chapter, written jointly with Derek Stacey, develops a methodology to estimate occupation-specific multidimensional skill measures that exploit variation in both wages and multidimensional skill ratings. The resulting skill measures use a common interval scale (log wage units), which allows for straightforward comparisons across occupations, aggregation across skills, and interpretation of the various components of each occupation’s skill portfolio.

The second chapter uses these skill measures to investigate the role multidimensional skills can play in explaining the gender wage gap. I find that different types of non-manual skill are remunerated to men and women at different rates. More specifically, women are paid more for their literacy skills, while men are paid more for their cognitive skills. I then show this skill-based wage gap is primarily borne by differences in the returns to skills as opposed to differences in occupation selection.

The third chapter uses the multidimensional skill measures to analyze the relationship between worker skills and occupation skill requirements, with a focus on skill mismatch. Using data from the NLSY, I first document patterns on skill mismatch in workers’ initial jobs that suggest workers, on average, are not in occupations that primarily use their comparative skill advantage. As workers gain experience they, on average, do not correct this initial skill mismatch by transitioning occupations. Two possible explanations for this skill immobility is that workers are involuntarily constrained or, due to skill accumulation, are rationally staying in an initial mismatch. To explain observed skill immobility, I develop a model of occupational choice with heterogeneous worker skills, matching frictions, and skill accumulation where occupations differ in their skill intensities. The model is calibrated to match occupational skill requirements and is used to decompose worker mismatch into voluntary and involuntary mismatch. I find a quarter of end of career mismatches can be attributed to workers whose inherent skills have transformed to match their initial mismatch occupation.