Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/339486 
Year of Publication: 
2025
Series/Report no.: 
IFS Working Papers No. 25/15
Publisher: 
The Institute for Fiscal Studies (IFS), London
Abstract: 
As technological advances accelerate and labour demands shift, the ability of workers to reallocate across occupations will be crucial for shaping labour market dynamics, inequality, and effective policy design. In this paper, we develop a tractable equilibrium model of the labour market that incorporates heterogeneous labour supply elasticities to different occupations and across different occupation pairs. Using worker flows from German administrative data, we estimate these elasticities and validate them through external measures such as occupational licensing and task distance. Our model quantifies the heterogeneous impacts of recent labour demand shifts on occupational wages and employment, highlighting the role of cross-occupation effects in shaping market responses to shocks. Finally, we leverage this framework to project employment flows and wage adjustments under future occupational demand shifts that are implied by the latest automation technologies.
Subjects: 
Heterogeneous Labour Supply Elasticities
Occupational Substitutability
Labour Demand Shocks
German Panel Data
Job Flows
Occupational Employment and Wages
Automation Technologies
Future Projections
JEL: 
J21
J23
J24
J31
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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