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Department of Economics Seminar with Dr Ben Etheridge, University of Essex The impact of labour demand shocks when occupational labour supplies are heterogeneous
Abstract: As technological change accelerates and labour demands shift, workers' ability to reallocate across occupations will shape labour market dynamics, inequality, and policy design. We develop a tractable equilibrium model with heterogeneous labour supply elasticities to different occupations and occupation pairs. Using worker flows from German administrative data, we estimate and validate these elasticities with occupational licensing and task distance. The model quantifies how the correlation of demand shifts between cross-elastic occupations has slowed employment adjustment, impacted job polarisation, and raised wage inequality. Finally, we project employment flows and wage changes under future occupational demand shocks implied by emerging automation technologies.