Job polarization, structural transformation and biased technological change

Abstract

By reviewing our work in Bárány, Siegel (2018a, 2018b), this article emphasizes the link between job polarization and structural change. We summarize evidence that job polarization in the United States has started as early as the 1950s: middle-wage workers have been losing both in terms of employment and average wage growth compared to low-and high-wage workers. Furthermore, at least since the 1960s the same patterns for both employment and wages have been discernible in terms of three broad sectors: low-skilled services, manufacturing and high-skilled services, and these two phenomena are closely linked. Finally, we propose a model where technology evolves at the sector-occupation cell level that can capture the employment reallocation across sectors, occupations, and within sectors. We show that this framework can be used to assess what type of biased technological change is the driver of the observed reallocations. The data suggests that technological change has been biased not only across occupations or sectors, but also across sector-occupation cells.