Florian Hack (Institute for Employment Research)
This paper investigates how the similarity of occupational task inputs shapes labor mobility and wage out comes following job displacement. Using mass layoffs and establishment closures in Germany between 2014 and 2019, we examine how a workers position within the occupation-level task structure influences reemployment prospects and earnings losses. We construct a novel, weighted cosine similarity measure to capture task overlap between occupations, assigning greater importance to overlaps based on rarer tasks. Our event-study frame work shows that higher task similarity between pre- and post-displacement occupations significantly reduces displacement costs. Moreover, for workers who remain within their original occupation, centrality in the task net workdefined as the relevance of a jobs tasks to other occupationsfacilitates quicker transitions and smaller wage penalties. Extending beyond the occupational dimension, we incorporate firm-specific wage effects using a job-level fixed effects model. This allows us to distinguish between displacement costs arising from occupational mismatch and those driven by firm wage premia. We show that reallocation to firms with lower task centrality and weaker wage premia contributes significantly to post-displacement earnings losses. Our findings highlight the dual importance of occupational task structures and firm heterogeneity in explaining the uneven labor market impacts of displacement and provide a framework for identifying workers most vulnerable to long-term scarring.