Essays on the economics of specialized skills

Liu, T. 2025. Essays on the Economics of Specialized Skills. Economic studies 227. 125 pp. Uppsala: Department of Economics, Uppsala University. ISBN 978-91-506-3125-8.

Essay I: This paper studies how industry-specific shocks affect workers with specialized skills, focusing on the impact of the burst of the dotcom bubble on the careers of IT-specialized college graduates in Sweden. Graduates entering the labor market during the bust faced sharp initial earnings penalties and lower probabilities of IT sector employment compared to boom cohorts. However, they exhibited remarkable resilience, recovering earnings by leveraging their skills in
high-paying, non-IT occupations. Incumbent IT workers, while remaining within the IT sector, experienced a decline in earnings as they moved to lower-premium firms.

Essay II: We study local labor market effects from massive boom-bust movements in the IT sector. We use Swedish register data, exploring regional variation in the exposure to the IT boom-bust cycle around year 2000. Our results show clear evidence of pro-cyclical spillovers, in particular affecting earnings in local construction, housing, and business services. The results suggest that regions that attract IT-firms also expose themselves to larger earnings variability
in other sectors.

Essay III: This paper examines how university applicants in China respond to a government policy that designates specific university-discipline units as centers of excellence. Using a Difference-in-Differences approach, we analyze the policy’s impact at the discipline level. We find that the excellence designation attracts higher-ranking applicants to designated units, significantly increasing competition within those disciplines. Furthermore, we observe spillover effects within universities: non-designated disciplines also benefit from increased competition, likely due to students perceiving an overall enhancement in quality. These findings underscore how discipline-specific designations can elevate not only the designated units but also other fields within the same institution, shaping student decisions and elevating the university's overall competitiveness.

Keywords: specialized human capital, IT industry, higher education policy