Who recovers from a job loss? The importance of cognitive and non-cognitive skills

Published: 23 February 2021
Author: Matz Dahlberg, And Linna Martén, And Björn Öckert, And

A well-functioning labor market is characterized by job reallocations, but the individual costs can be vast. We examine if individual’s ability to cope with such adjustments depends on their cognitive and non-cognitive skills (measured by population-wide enlistment tests). Since selection into unemployment is a function of skills, we address the endogeneity of a job loss by exploiting the exogenous labor market shock provided by the military base closures in Sweden following the end of the Cold War. We find that labor earnings decrease and unemployment and social insurance benefits increase for displaced workers. In particular, individuals with high cognitive and, especially, non-cognitive skills face shorter unemployment spells than the individuals with
low skills.


Keywords: Cognitive and Non-cognitive skills; Displaced workers; Unemployment; Plant
closure; Defense draw down
JEL classification: J63, J65, H56

Contact

IFAU Working paper 2021:2, "Who recovers from a job loss? The importance of cognitive and non-cognitive skills", is written by Matz Dahlberg, Linna Martén och Björn Öckert. For further details, please contact :

Linna Martén, linna.marten@nek.uu.se,

Björn Öckert, björn.ockert@ifau.uu.se, telefon 018-471 70 95

Matz Dahlberg, matz.dahlberg@ibf.uu.se, 070-1679175.