Working Paper: CEPR ID: DP14623
Authors: Donald R. Davis; Eric Mengus; Tomasz K. Michalski
Abstract: Labor market polarization is among the most important features in recent decades of advanced country labor markets. Yet key spatial aspects of this phenomenon remain under- explored. We develop four key facts that document the universality of polarization, a city-size difference in the shock magnitudes, a skew in the types of middle-paid jobs lost, and the role of polarization in the great urban divergence. Existing theories cannot account for these facts. Hence we develop a parsimonious theoretical account that does so by integrating elements from the literatures on labor market polarization and systems of cities with heterogeneous labor in spatial equilibrium.
Keywords: Labor Market Polarization; System of Cities; Inequality
JEL Codes: J21; R12; R13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| labor market polarization (J48) | decline in middle-paid jobs (F66) |
| decline in middle-paid jobs (F66) | greater urban divergence (R12) |
| labor market polarization (J48) | job loss skewed towards upper tier of middle-paid jobs in large cities (F66) |
| initial exposure to middle-paid jobs (J68) | job loss in large cities (R23) |
| great urban divergence (R12) | larger cities pulling away from smaller cities in terms of skill and job growth (R12) |