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This paper explores how firms' demands for new skills (occupations) affect workers' labor market outcomes and within- and across-firms wage dispersion. I outline a stylized matching model (Jovanovic 1979) to study firms' differential responses to information frictions when hiring for new vs. preexisting occupations. Firms respond to higher information frictions when creating
new roles by screening more, which results in better match quality for new positions. Using matched employer–employee panel data from Sweden, I show that workers entering newly created roles within firms start with higher wages and stay longer, leading to substantial differences in earnings within jobs. Sorting analysis indicates no selection into positions based on observed or unobserved worker characteristics. The study contributes to understanding employers' hiring behavior, the importance of jobs in workers' careers, and the effect of hiring frictions on wage structure.
