Occupational Choice and Exposure to Business Cycles

This work is joint with Bence Bardóczy, Nezih Guner, and Georgi Kocharkov. Recessions are not uniform across demographic groups, and the sectoral and occupational composition of employment explains much of the differences in exposure. Furthermore, compared to purely aggregate shocks, the relative importance of sector or region-specific shocks in determining business cycles has increased over time and is prominent today. We build a business cycle model with heterogeneous households and occupational choices to answer whether targeted taxes and transfers may mitigate or even alleviate the adverse effects of business cycles on the income and employment opportunities of those most affected. We leverage administrative taxpayer and matched employee-employer data to calibrate the model economy for Germany.