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Firm and Worker Adaptation to Unexpected Events

NOMIS Project 2020

— 2024

What is it that allows some workers and businesses to adapt effectively to unexpected events and others to fall by the wayside? How can we better understand the skills of value in the work force and in management, and improve how they are measured?

The project Firm and Worker Adaptation to Unexpected Events aims to answer these questions by zeroing in on the skills that contribute to the durable success of firms, businesses and workers using a combination of economic theory and experimental laboratory design to measure key skills, and the development of survey instruments. Based on the simple idea that many of the skills that matter evolve, the core hypothesis of the project is that successful workers and firms perform better and grow faster because they take in features of the world in a flexible manner and thereafter make responsive decisions in a world of change.

In tandem with experimental implementation, the research team will develop survey instruments that can be implemented in large-scale surveys. For this, the researchers look to Denmark, which offers a data infrastructure through which it is possible to sample from the population to implement large-scale surveys. Uniquely, survey answers can be linked back to administrative records of the respondents. Administrative data has been gathered for the entire population since the 1980s, and provides complete histories of labor market performance of individuals and the firms they have been working in. Historical data will show how measured skills have impacted performance over long periods. Data from the years following survey implementation will reveal the predictive role of the measured skills in durable success. Improved measurement of these skills is of huge practical importance to workers, firms, educators, and therefore to society.

The Firm and Worker Adaptation project is being led by Andrew Caplin at New York University (NY, US) and Søren Leth-Petersen at the University of Copenhagen (Denmark), in collaboration with David Deming, a renowned economist at the Harvard Kennedy School of Government, who leads the Skills Lab focusing on topics related to this project. Firm and Worker Adaptation to Unexpected Events is an extension of The Economic Shadow of COVID-19 project.


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