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Open Access Publications from the University of California

Occupational Diversification, Offshoring and Labor Market Volatility

  • Author(s): Bardhan, Ashok;
  • Tang, John
  • et al.

This paper asks a simple question: Are occupations that are well diversified across sectors less volatile, and maybe less susceptible to external shocks? Most external shocks (e.g. manufacturing offshoring, oil shocks) impact the labor market along sectoral lines, i.e. they impact product and output markets, and as a consequence they affect employment in various occupations. Some shocks, however, such as services offshoring affect horizontals or occupations. We find that an occupation spread out across many industrial sectors is less volatile, both in terms of numbers employed and the average wage. A dummy variable for offshoreable occupations does not affect the results; however, geographically clustered occupations seem more “at-risk,” after accounting for sectoral diversification.

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