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Inequality and Specialization: The Growth of Low-Skill Service Jobs in the United States

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Author Info
Autor, David () (MIT)
Dorn, David () (CEMFI, Madrid)

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Abstract

After a decade in which wages and employment fell precipitously in low-skill occupations and expanded in high-skill occupations, the shape of U.S. earnings and job growth sharply polarized in the 1990s. Employment shares and relative earnings rose in both low and high-skill jobs, leading to a distinct U-shaped relationship between skill levels and employment and wage growth. This paper analyzes the sources of the changing shape of the lower-tail of the U.S. wage and employment distributions. A first contribution is to document a hitherto unknown fact: the twisting of the lower tail is substantially accounted for by a single proximate cause − rising employment and wages in low-education, in-person service occupations. We study the determinants of this rise at the level of local labor markets over the period of 1950 through 2005. Our approach is rooted in a model of changing task specialization in which "routine" clerical and production tasks are displaced by automation. We find that in labor markets that were initially specialized in routine-intensive occupations, employment and wages polarized after 1980, with growing employment and earnings in both high-skill occupations and low-skill service jobs.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4290.

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Length: 57 pages
Date of creation: Jul 2009
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Handle: RePEc:iza:izadps:dp4290

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Related research
Keywords: skill demand; job tasks; inequality; polarization; technological change; occupational choice;

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Find related papers by JEL classification:
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
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
J62 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Job, Occupational and Intergenerational Mobility; Promotion
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes

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  1. Edward L. Glaeser & Matthew G. Resseger & Kristina Tobio, 2008. "Urban Inequality," NBER Working Papers 14419, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Borghans Lex & Weel Bas ter, 2008. "Understanding the Technology of Computer Technology Diffusion: Explaining Computer Adoption Patterns and Implications for the Wage Structure," Research Memoranda 009, Maastricht : ROA, Research Centre for Education and the Labour Market. [Downloadable!]
    Other versions:
  3. Giovanni Peri & Chad Sparber, 2008. "Task Specialization, Immigration, and Wages," CReAM Discussion Paper Series 00802, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London. [Downloadable!]
    Other versions:
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