Title page

Contents

Abstract 3

1. Introduction 4

2. Conceptual framework 9

3. Data 14

3.1. Measuring skills distance 14

3.2. Occupation mobility 20

3.3. Final sample 21

4. Agravity model approach 22

5. Empirical results 26

6. The model 32

6.1. Workers' and jobs' types 32

6.2. Matching 33

6.3. Match values and choices 34

6.4. Equilibrium 35

6.5. Identification 36

6.6. Computation 38

6.7. Estimation 40

7. Counterfactual analysis 41

8. Conclusion 45

References 47

Appendix 52

A. Additional Tables and Figures 52

B. Model extensions 64

Table 1. Summary statistics 22

Table 2. Effects of distance and digital distance on mobility flows 27

Table 3. Robustness of the effect of changes in digital distance on end-line mobility flows 29

Table 4. Counterfactual results on occupation switchers 43

Table 5. Counterfactual results on mobility to non-employment 45

Figure 1. Visualization of the conceptual framework 11

Figure 2. Evolution of skill distance over the period 19

Table A1. List of occupations classified as fully digital 58

Table A2. Effect of distance and digital distance on mobility flows using distance measures assuming skill obsolescence 59

Table A3. Robustness of the effect of changes in digital distance on long run mobility flows 60

Table A4. Effect of distance and digital distance on mobility flows using distance measures that exclude generic skills and using a more aggregate classification of occupations 61

Table A5. Robustness of the effect on long run mobility flows to following age cohorts 62

Table A6. Structural estimation of mobility and wage equations 63

Table A7. Counterfactual results on stayers 63

Figure A1. The 25 skills with the highest growth in demand over 2011-2019 52

Figure A2. Visualization of the conceptual framework 53

Figure A3. Digital intensity of occupations in 2011 54

Figure A4. Correlation between distance in 2011 and in 2019 by occupation pairs 54

Figure A5. Correlation between distance in 2011 and change in distance between 2011 and 2019 by occupation pairs 55

Figure A6. Matrix of bilateral flows from 2011 to 2012 56

Figure A7. Linearity of the effect of skill distance and digital skill distance 57

Figure A8. Distribution of growth rates in employment shares across occupations 57