Labor Market Polarization and International Macroeconomic Dynamics
AbstractDuring the last thirty years, labor markets in advanced economies where characterized by their remarkable polarization. As job opportunities in middle-skill occupations disappeared, employment opportunities concentrated in the highest- and lowest wage occupations. I develop a two-country stochastic growth model that incorporates trade in tasks, rather than in goods, and reveal that this setup can replicate the observed polarization in the U.S. This polarization was not an steady process: the relative employment share of each skill group significantly fluctuated over short-to medium horizons. I show that the domestic and international aggregate shocks estimated within this framework can rationalize such employment dynamics, while providing a good fit to the macroeconomic data. The model is estimated with employment data for different skills groups, and trade-weighted macroeconomic indicators.
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Bibliographic InfoPaper provided by Society for Economic Dynamics in its series 2013 Meeting Papers with number 291.
Date of creation: 2013
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Other versions of this item:
- Mandelman, Federico S., 2013. "Labor market polarization and international macroeconomic dynamics," Working Paper 2013-17, Federal Reserve Bank of Atlanta.
- F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-10-05 (All new papers)
- NEP-DGE-2013-10-05 (Dynamic General Equilibrium)
- NEP-MAC-2013-10-05 (Macroeconomics)
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