Upgrading or polarization? Occupational change in Britain, Germany, Spain and Switzerland, 1990-2008

We analyze the pattern of occupational change over the last two decades in Britain, Germany, Spain and Switzerland: which jobs have been expanding – high-paid jobs, low-paid jobs or both? Based on individual-level data, we examine what hypothesis is most consistent with the observed change: skill-biased technical change, routinization, skill supply evolution or wage-setting institutions? Our analysis reveals massive occupational upgrading that closely matches educational expansion: employment expanded most at the top of the occupational hierarchy, among managers and professionals. In parallel, mid-range occupations (clerks and production workers) declined relative to those at the bottom (interpersonal service workers). This U-shaped pattern of upgrading is consistent with the routinization hypothesis: technology seems a better substitute for average-paid clerical and manufacturing jobs than for low-end service employment. Yet country differences in low-paid service job creation suggest that wage-setting institutions play an important role, channelling technological change into more or less polarized patterns of upgrading.