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Occupations and Job Polarization

Paper Session

Saturday, Jan. 5, 2019 2:30 PM - 4:30 PM

Hyatt Regency Atlanta, Hanover B
Hosted By: Labor and Employment Relations Association
  • Chair: Bart Hobijn, Arizona State University

Is Employment Polarization Informative About Wage Inequality and Is Employment Really Polarizing?

Jennifer Hunt
Rutgers University
Ryan Nunn
Brookings Institution


We re--examine changes in U.S. employment by skill, departing from most previous literature by equating skill with wage rather than occupation. By assigning workers to real hourly wage bins with time-invariant thresholds and tracking over time the shares of workers in each, we find a steady decline since 1973 in the share of both men and women earning middle wages, consistent with occupation--based analysis. However, we find that both over the business cycle and the longer run, the shares of workers in the top and bottom bins move in opposite directions. This is inconsistent with the employment polarization found in the polarization literature's occupation--based analysis. We show that occupation mean wages do not capture the bottom of the individual wage distribution; that middle--wage workers are distributed widely across occupations; and that much of the 1990s growth in low--wage occupations previously found in the census is an artifact of an unbridgeable change in occupation codes. We conclude that computerization and automation are not causing polarization, and that while they may be increasing wage inequality, this cannot be determined using occupation--based analysis.

The Cyclical Component of Labor Market Polarization and Jobless Recoveries

Paul Gaggl
University of North Carolina-Charlotte
Sylvia Kaufmann
Study Center Gerzensee


We analyze quarterly occupation-level data from the US Current Population Survey for 1976-2013. Based on common cyclical employment dynamics, we identify two clusters of occupations that roughly correspond to the widely discussed notion of “routine” and “non-routine” jobs. After decomposing the cyclical dynamics into a cluster-specific (“structural”) and an occupation-specific (“idiosyncratic”) component, we detect significant structural breaks in the systematic dynamics of both clusters around 1990. We show that, absent these breaks, employment in the three “jobless recoveries” since 1990 would have recovered significantly more strongly than observed in the data, even after controlling for observed idiosyncratic shocks.

The United States Job Ladder in the New Millennium

Isabel Cairo
Federal Reserve Board
Henry R. Hyatt
U.S. Census Bureau
Nellie Zhao
Cornell University


In the years following 2000, the U.S. economy has exhibited relatively strong growth in employment in lower-productivity industries in which jobs pay less. In this study, we explore this buildup in light of the dramatic slowdown of the “job ladder” in the labor market downturns associated with the 2001 and 2007-2009 recessions. We propose and estimate a model of on-the-job search, which allows us to explore the effects of aggregate demand shocks on the composition of employment. When aggregate labor market conditions are weak, poaching, which reallocates workers from less productive to more productive employers, slows down. Our empirical analysis links the slowdown in the job ladder with the buildup in less productive jobs.

Early-Career Occupational Choices of Low-Skill Workers: A Historical Perspective

Claudia Macaluso
University of Illinois-Urbana-Champaign


I study how occupational choices of young men have changed in the last four decades, and show that men entering the labor force in the 2010s are more likely to start in a "dead-end" job than their peers in the 1980s. I measure the skill remoteness of occupations using historical inter-occupational worker flows, and conclude that low-skill workers in the later part of the sample tend to start working in jobs that offer fewer options for occupational switches. I then quantify the impact of this change on low-skill workers attachment to the labor force, employment, and earnings, and relate my results to the secular decline in the employment rate of young men.
Aysegul Sahin
Federal Reserve Bank of New York
David Wiczer
Stony Brook University
JEL Classifications
  • J2 - Demand and Supply of Labor