Sticky Occupations and Their Long-Run Implications
Paper Session
Saturday, Jan. 3, 2026 8:00 AM - 10:00 AM (EST)
- Chair: William Kerr, Harvard University
Path Dependence in the Labor Market: The Long-run Effects of Early Career Occupational Experience
Abstract
We study the causal effect of early career occupational experiences on labor market outcomes. To do so, we pair over two decades of administrative tax data with internal personnel records from the largest employer of young adults in the United States: the US Army. Soldiers work in a diverse and varied set of military occupations, including non-combat roles like mechanics, legal services, financial specialists, cooks, dental hygienists, police officers, and network/computer specialists. Eligibility is determined by test score cutoffs which we leverage in a series of 37 regression discontinuity designs. We find that early career occupational experiences generate a substantial amount of path dependence, with point estimates that suggest a 19p.p. increase in the likelihood of being observed in an identical or closely related occupation as much as 20 years later. We also find highly heterogeneous, yet predictable, effects on long-run wages. Implied changes in occupational earnings premia explain over 60% of the causal variation in earnings, with slope estimates that suggest improvements in average occupational wage rates are tightly linked to actual causal effects on earnings. Changes in non-routine and routine task intensity also explain causal wage gains; however, educational attainment and union density do not. Taken together, our results highlight the importance of early career occupational experience as a key channel for promoting long run economic success among young adults who are not college bound.The Transformation of Self-Employment
Abstract
Over the past half-century, while self-employment has consistently accounted for around one in ten of the United States workforce, its composition has changed. Since 1970, industries with high startup capital requirements have declined from 53% of self-employment to 23%. This same time period also witnessed declines in hometown local entrepreneurship and the probability of the self-employed being among top earners. Using 2016 data, we show that high startup capital requirements are linked with lower profitability at small scales. The transition away from high startup capital industries appears most closely linked to changes in small business production functions and less due to advantageous reallocation to other opportunities, growth in returns-to-scale among large businesses, or a worsening of financing conditions and debt levels.AI-Accelerated Occupational Decline and the Mobility Trap
Abstract
Economic transformation poses challenges that extend beyond the creation, destruction, or redistribution of jobs across occupations. It raises a related question: can workers successfully navigate this disruption by switching occupations, or do these transitions result in lower wages or worse career prospects? This paper examines how recent occupational restructuring, driven in part by the post-2018 acceleration of Transformer-based AI, shapes worker mobility. We propose and test a mobility trap hypothesis: whether workers in declining occupations with high AI exposure are effectively "trapped," unable to transition into high-growth occupations, and whether those who do switch nonetheless struggle to achieve upward mobility.To test this hypothesis, we integrate detailed administrative data from the Bureau of Labor Statistics, including both short-term employment changes and ten-year occupational projections, with individual worker transition data from the Current Population Survey (2018–2024). This allows us to evaluate the impact of AI-accelerated restructuring through three interrelated analyses: who moves, where they move, and their subsequent economic outcomes.
Our findings reveal a pronounced mobility trap. Workers in declining occupations with high AI exposure show significantly higher mobility rates than peers in growing fields. Yet those who leave declining occupations are 5.2 times more likely to transition into another declining occupation than into a growing one. These moves are frequently lateral or downward, with almost 70% resulting in lower occupational status based on occupation-level income. This evidence confirms that significant barriers are hardening within the labor market. Ongoing occupational restructuring threatens not merely to displace jobs but to entrench the marginal position of vulnerable workers, deepening existing disadvantages and echoing the inequalities observed during manufacturing's decline.
When is Mobility Possible? Escaping from Declining Occupations
Abstract
We compare the labor market trajectories of men and women in occupations that are differently exposed to technological change, both at the broad occupational level and with respect the worker's specific employer. Workers in declining occupations experience hours and earnings consequences, with heterogeneity in how well they are able to move to better opportunities. We quantify these differences by worker and family traits (e.g., education levels, having children) and in terms of original employers and locations (e.g., isolated manufacturing facility vs. urban service sector). We conduct similar estimations using employer-employee data in Norway and the United States to contrast different labor market institutional environments for the same sectors, such as Norway's stronger emphasis on collective bargaining.JEL Classifications
- J2 - Demand and Supply of Labor
- O3 - Innovation; Research and Development; Technological Change; Intellectual Property Rights