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Job Polarization and the Labor Market: A Worker Flow Analysis

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  • Alexandre Ounnas

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

Abstract

This paper provides an analysis of the effects of Job Polarization on the labor market through the study of worker flows and transition rates disaggregated by occupations. I use the Current Population Survey (CPS) for the period 1976-2010 and the occupation classification of Autor and Dorn (2013) to rank occupations between high, middle and low skill. I then use the variance decomposition of Elsby et al. (2015) to measure the percentage point contributions of each hazard rate to labor market stocks fluctuations. This flow rate analysis is used to study 3 phenomena. Firstly, the decrease in middle skill (or routine) employment between 1980 and 2006. The results highlight the role of employment to employment transition rates in the early part of Polarization between 1980 and 1999. After the year 2000, hazard rates between middle skill employment and unemployment/inactivity account for the decrease in employment of these occupations. Secondly, I analyze Jobless recoveries (Jaimovich and Siu (2012)) and the hazard rate contributing to the slow rebound in aggregate employment after the recent recessions. I find that hazard rates from unemployment to employment of all 3 groups of occupations contribute negatively to aggregate employment fluctuations during recoveries. Lastly, I analyze fluctuations of labor force participation as Foote and Ryan (2015) and Cortes et al. (2017) suggest that Polarization lead middle skill workers to exit the labor force. I confirm this observation as the results show that hazard rates between middle skill employment and inactivity contribute negatively to labor fluctuations between 1990 and 2006.

Suggested Citation

  • Alexandre Ounnas, 2020. "Job Polarization and the Labor Market: A Worker Flow Analysis," LIDAM Discussion Papers IRES 2020010, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    • Handle: RePEc:ctl:louvir:2020010
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    References listed on IDEAS

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    More about this item

    Keywords

    Worker flows; occupations; unemployment; labor force participation; Job Polarization;
    All these keywords.

    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General
    • J0 - Labor and Demographic Economics - - General

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