Long-run Patterns of Labour Market Polarisation

Summary:

The past four decades have witnessed dramatic changes in the structure of employment. In particular, the rapid increase in computational power has led to large-scale reductions in employment in routine-based jobs that. These jobs have been shown to be concentrated in middle skill occupations. A large literature on labour market polarisation characterises and measures these processes at an aggregate level. However, to date there is little information regarding the individual worker adjustment processes related to routine-biased technological change.

Using an administrative panel data set for Germany, the researchers follow workers over an extended period of time and provide evidence of both the short-term adjustment process and medium-run effects of routine task intensive job loss at an individual level. The study shows a marked and steady shift in employment away from routine, middle-skill occupations. In subsequent analysis, the authors demonstrate how exposure to jobs with higher routine task content is associated with a reduced likelihood of being in employment in both the short term and medium term.

This risk has increased over the past four decades. More generally, the research demonstrates that routine task work is associated with reduced job stability and a greater likelihood of experiencing periods of unemployment. However, these negative effects of routine work appear to be concentrated in increased employment to employment or employment to unemployment transitions rather than longer periods of unemployment.

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