Technological change and employment polarisation

Abstract

A consensus has emerged among labour economists that the structure of employment has changed over time. On the supply side, many industrialised economies experienced the effects of an ageing labour force with greater female participation. This was combined with significant changes in the composition of the workforce, mainly because of rapid education upgrading and migration surges. On the demand side, economists have tried to explain the new shape of the employment structure through technology and trade. In this dissertation we present five chapters in which we analyse the role of technology and its effect on employment. In the first chapter we present the background of the main theoretical frameworks within which researchers explain how technology shapes the structure of the labour market. We discuss the main difficulties from a conceptual, operational, and empirical point of view. The second chapter contributes to the measurement of this phenomenon. We compare existing measures of task indices using four different databases, paying special attention to the problems associated with measurement. The third chapter contributes to the literature on employment in Spain, providing evidence of job polarisation. That is, we find a decrease in middle-skilled workers characterised by clerical and production occupations, and an increase in high-paying professional occupations and low-paying jobs. Our evidence suggest that changes in employment shares are negatively related to the initial level of routine task intensity. In the fourth chapter, we look at the Spanish provinces. We exploit geographical variation across Spanish local labour markets in their specialisation in routine-intensity industries. The findings are consistent with the importance of technology in explaining the displacement of routine task work and its subsequent reallocation at the bottom of the employment distribution. However, no significant effect of technological exposure on skilled non-routine cognitive employment is found. In the final chapter, we apply the model presented in the previous two chapters to the case of employment opportunities of migrant workers in Germany. We explore the effect of an increase in the relative supply of migrants on German natives' task reallocation. The hypothesis is that as low-skilled migrants enter the labour market into predominantly manual-intensive occupations, natives self-relocate to occupations which make use of their comparative advantage: communication skills. We find that an increase in the share of migrant population is indeed negatively associated with the native population's relative supply of manual tasks.