Working Paper: NBER ID: w15150
Authors: David H. Autor; David Dorn
Abstract: We offer an integrated explanation and empirical analysis of the polarization of U.S. employment and wages between 1980 and 2005, and the concurrent growth of low skill service occupations. We attribute polarization to the interaction between consumer preferences, which favor variety over specialization, and the falling cost of automating routine, codifiable job tasks. Applying a spatial equilibrium model, we derive, test, and confirm four implications of this hypothesis. Local labor markets that were specialized in routine activities differentially adopted information technology, reallocated low skill labor into service occupations (employment polarization), experienced earnings growth at the tails of the distribution (wage polarization), and received inflows of skilled labor.
Keywords: employment polarization; wage polarization; low-skill service jobs; labor market; technological change
JEL Codes: E24; J24; J31; J62; O33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| local labor market specialization in routine tasks (J29) | greater adoption of information technology (L86) |
| greater adoption of information technology (L86) | displacement of low-skill labor into service occupations (F66) |
| displacement of low-skill labor into service occupations (F66) | wage polarization (J31) |
| routine task specialization (L23) | service job growth (J68) |
| routine task specialization (L23) | wage changes (J31) |
| historical specialization of local labor markets in routine tasks (J29) | adaptation to technological change (O33) |
| historical specialization of local labor markets in routine tasks (J29) | demand for service jobs (J23) |