Authors: Carlos Carrillo-Tudela, Ludo Visschers, and David Wiczer
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Staff Reports
Cyclical Earnings, Career and Employment Transitions
Number 1206
September 2026
September 2026
JEL classification: E24, E30, J62, J63, J64
Career changes across occupations are central to the cyclical behavior of workers’ earnings growth. Using SIPP data, we show that workers who switch both employers and occupations account for 58 percent of the increase in the left-skewness of earnings growth during recessions. This is driven mainly by cyclical variation in the earnings changes upon a transition, rather than in transition flows. In a business cycle model with on-the-job search over employer and occupation ladders, cyclical shifts in the quality of worker-occupation matches are the main source of cyclical earnings risk, but they generate procyclical skewness only through workers’ optimal mobility decisions: without these, procyclical skewness becomes countercyclical variance. Our results give a structural foundation to reduced-form income processes with higher-order risk, and point to policies that target occupational reallocation directly.
Author Disclosure Statement(s)
Carlos Carrillo-Tudela
The author declares that (s)he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
Ludo Visschers
I declare that I have no relevant or material financial interests that relate to the research described in this paper. The research in this paper was supported by research grants from the UK Economic and Social Research Council (ESRC), award references ES/V016970/1, and ES/L009633/1; from Fundación BBVA (Ayudas a Equipos de Investigación Científica Sars-Cov-2 y Covid-19); by the Spanish Ministry of Science, Innovation and Universities (Spanish Research Agency): the María de Maeztu grant (award reference CEX2021-001181-M), the Programa ATRAE and a Project Grant PID2024-160896OB-I00 (funding agency reference MICIU/AEI /10.13039/501100011033).
David Wiczer
The author declares that (s)he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staF_reports/index.html.
The author declares that (s)he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
Ludo Visschers
I declare that I have no relevant or material financial interests that relate to the research described in this paper. The research in this paper was supported by research grants from the UK Economic and Social Research Council (ESRC), award references ES/V016970/1, and ES/L009633/1; from Fundación BBVA (Ayudas a Equipos de Investigación Científica Sars-Cov-2 y Covid-19); by the Spanish Ministry of Science, Innovation and Universities (Spanish Research Agency): the María de Maeztu grant (award reference CEX2021-001181-M), the Programa ATRAE and a Project Grant PID2024-160896OB-I00 (funding agency reference MICIU/AEI /10.13039/501100011033).
David Wiczer
The author declares that (s)he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staF_reports/index.html.
Suggested Citation:
Carrillo-Tudela, Carlos, Ludo Visschers, and David Wiczer. 2026. “Cyclical Earnings, Career and Employment Transitions.” Federal Reserve Bank of New York Staff Reports, no. 1206, September. https://doi.org/10.59576/sr.1206
Carrillo-Tudela, Carlos, Ludo Visschers, and David Wiczer. 2026. “Cyclical Earnings, Career and Employment Transitions.” Federal Reserve Bank of New York Staff Reports, no. 1206, September. https://doi.org/10.59576/sr.1206
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