Skills-Matching During Recessions and Implications for Lower-Skilled Workers

On the New York Times blog Economix (Explaining the Science of Every Day Life), Princeton economist Alan Krueger has discussed the US job market for college graduates (here). Krueger raises the point that underutilisation of highly educated workers' skills should be a concern during periods of recession. He bases this on the idea that employers tend to be more selective in downturns - "the job situation is likely to weaken considerably for less-educated workers as the downturn persists, however, because employers are likely to raise skill requirements."

Krueger mentions research by UCD economist Paul Devereux, which finds that “the education levels of new hires within occupations are higher when the unemployment rate is high and this effect is more pronounced in lower-paying occupations.” Paul Devereux's paper "Occupational Upgrading and the Business Cycle" (Labour, 2003) is available here. The paper concludes with the idea that low-skilled individuals suffer most from recessions in terms of occupation quality and unemployment.