http://www.iser.essex.ac.uk/publications/working-papers/iser/2009-10

A fundamental question asked by many analysts, many policy makers, and many workers, is whether employment has become less secure, in particular as a result of globalisation and the subsequent pressure on profits, or of pressure on governments to reduce taxation and therefore public-sector employment. The empirical picture is far from clear. While high job turnover can be inefficient, whether for the employee or for the worker, and there is some evidence of a widespread fall in job tenure, which suggests higher turnover, this decline is not substantial and can also have a variety of causes, both good and bad. Because such outcomes are difficult to interpret we choose here a different measure of turnover, of occupations rather than of jobs. We assume that if people change not only their job but the type of job they do, for instance if they go from being a teacher to a civil servant, or from a welder to a carpenter, then they lose some element of all they have learned hitherto. Indeed, some evidence from the U.S. indicates not only high occupational turnover but that this results in relatively low growth in wages. This suggests some labour-market ‘turbulence’ caused by people being caught in poor jobs and unsuitable work, and forced as a consequence to try another type of work, not just another job. The problem with the approach used hitherto is that it is difficult to be sure when someone has in fact changed their occupation, as the codes which identify occupations are prone to measurement error. We limit this problem by only counting as changes in occupation those which are explicitly associated with a change of job. But in addition, some baseline comparison is needed. We compare the outcomes for those who change occupation to those who change job but without a change of occupation, and to those changing nothing at all. Finally, a comparison between two different types of country would help. We choose Britain, making use of the British Household Panel Study, and Germany, using the German-Socio-Economic Panel. We find that the correction of measurement error substantially reduces the degree of apparent occupational change, but that this is nevertheless far from insignificant. Over 10% of people change their occupation in Britain year on year, if we include people who have left employment and then returned, while in Germany the figure is 5%. Those who change occupation tend to be relatively poorly matched to their job (either over- or under-qualified), compared to those who change job while remaining in the same occupation, and they are also likely to be either less able or motivated (though these latter characteristics are estimated through a proxy measure rather than directly). However, in both countries those who change occupation mostly benefit from the change in terms of a wage increase higher than for non-changers and equal to other job-changers, but also in terms of higher job satisfaction. In fact their increase in satisfaction is the greatest of all. Thus occupational turnover does seem to suggest a form of turbulence in the labour market, which is greater in Britain than in Germany, but also seems to contain some self-correcting mechanisms – at least in the period under study.

We use British and German panel data to analyse job changes involving a change in occupation. We assess the extent of occupational change, taking into account the possibility of measurement error in occupational codes; whether job changes within the occupation differ from occupation changes in terms of the characteristics of those making such switches; and the effects of the two kinds of moves in terms of wages and job satisfaction. We find that occupation changes differ from other job changes, generally reflecting a less satisfactory employment situation, but also that the move in both cases is positive in respect of change in wages and job satisfaction. Working Paper 2009-10 2009-03-27 Simonetta Longhi Institute for Social and Economic Research slonghi@essex.ac.uk Malcolm Brynin Institute for Social and Economic Research brins@essex.ac.uk