Job polarization: An historical perspective

Abstract

This paper uses historical labour market data for Belgium for the period 1846-2011 to illustrate how the employment impacts of the ongoing Digital Revolution after 1980 compare to those of the Second Industrial Revolution before 1980. Our analyses show that the period 1846-1947 was characterized by economy-wide skill-upgrading due to an increase in the demand for skilled relative to unskilled workers because of skill-biased technological change (SBTC). The period 1947-81 is characterized by particularly high labour market turbulence, in part due to a gradual switch from economywide skill-upgrading to job polarization. Consequently, the impact of the ongoing Digital Revolution on labour markets after 1980 is not uniquely characterized by exceptionally high labour market turbulence but by the nature of changes in the composition of jobs, namely a process of job polarization. To explain job polarization, the paper discusses the hypothesis of Routine-Biased Technological Change (RBTC) that has recently emerged in the academic literature.