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Job polarization and the declining quality of knowledge workers: Evidence from the UK and Germany

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  • Cavaglia, Chiara
  • Etheridge, Ben

Abstract

Across the developed world, employment has polarized clearly by occupation, but changes to the wage structure have been harder to interpret. We examine changes to the wage structure in the UK and Germany, two countries with apparently very different trends. Using panel data, we argue that changes to quality-adjusted prices for occupations grouped by predominant tasks correlate strongly with employment growth in both countries, consistently with task-based changes to labour demand. The gap between price and average wage changes is strongest in top (knowledge) jobs, implying that the average quality of these workers has declined over time. We obtain further direct evidence on changes to worker quality using rich data on individual characteristics.

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  • Cavaglia, Chiara & Etheridge, Ben, 2020. "Job polarization and the declining quality of knowledge workers: Evidence from the UK and Germany," Labour Economics, Elsevier, vol. 66(C).
    • Handle: RePEc:eee:labeco:v:66:y:2020:i:c:s0927537120300889
    DOI: 10.1016/j.labeco.2020.101884
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    2. Michael J. Böhm & Hans-Martin von Gaudecker & Felix Schran, 2019. "Occupation Growth, Skill Prices, and Wage Inequality," CRC TR 224 Discussion Paper Series crctr224_2019_129, University of Bonn and University of Mannheim, Germany.
    3. Huajie Jiang & Qiguo Gong, 2022. "Does Skill Polarization Affect Wage Polarization? U.S. Evidence 2009–2021," Sustainability, MDPI, vol. 14(21), pages 1-17, October.
    4. Anna Pietruszka-Ortyl & Małgorzata Ćwiek & Bernard Ziębicki & Anna Wójcik-Karpacz, 2021. "Organizational Culture as a Prerequisite for Knowledge Transfer among IT Professionals: The Case of Energy Companies," Energies, MDPI, vol. 14(23), pages 1-32, December.
    5. Michael J. Bohm & Hans-Martin von Gaudecker, 2021. "The Performance of Recent Methods for Estimating Skill Prices in Panel Data," Papers 2111.12459, arXiv.org.
    6. Michael Böhm & Daniel Metzger & Per Strömberg, 2022. "“Since You’re So Rich, You Must Be Really Smart”: Talent, Rent Sharing, and the Finance Wage Premium," ECONtribute Discussion Papers Series 147, University of Bonn and University of Cologne, Germany.
    7. Patricia Gallego Granados, 2019. "The Part-Time Wage Gap across the Wage Distribution," Discussion Papers of DIW Berlin 1791, DIW Berlin, German Institute for Economic Research.
    8. Böhm, Michael Johannes & Metzger, Daniel & Strömberg, Per, 2022. ""Since You're So Rich, You Must Be Really Smart": Talent, Rent Sharing, and the Finance Wage Premium," IZA Discussion Papers 15337, Institute of Labor Economics (IZA).
    9. Eduard Storm, 2023. "On the measurement of tasks: does expert data get it right?," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 57(1), pages 1-24, December.
    10. Sasiwimon Warunsiri Paweenawat & Lusi Liao, 2022. "Brain over Brawn: Job Polarization, Structural Change, and Skill Prices," PIER Discussion Papers 189, Puey Ungphakorn Institute for Economic Research.
    11. Storm, Eduard, 2022. "On the measurement of tasks: Does expert data get it right?," Ruhr Economic Papers 948, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    12. Wenchao Jin, 2022. "Occupational polarisation and endogenous task-biased technical change," Working Paper Series 0622, Department of Economics, University of Sussex Business School.

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    More about this item

    Keywords

    Job polarization; Task prices; Roy model; Height; Cognitive ability;
    All these keywords.

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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