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Job polarization, technological change and routinization: Evidence for Portugal

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  • Fonseca, Tiago
  • Lima, Francisco
  • Pereira, Sonia C.

Abstract

This paper studies labor market polarization in Portugal, a country with slow capital accumulation and a low share of highly educated workers. We use firm census data for 1986–2007 and uncover polarization in employment and wages in the second half of this period. This mostly appears to be due to technological change. Our results show a sharp increase of both employment and wage premium for abstract tasks relative to routine tasks. In contrast to the existing literature, we separate between routine manual tasks and routine cognitive tasks. We uncover a sharp decline in routine manual employment but the decline in routine cognitive employment is modest and coupled with an increased wage premium that does not appear to be due to worker selection. This latter result is mainly explained by the large expansion of the service sector which employs many workers in routine cognitive-intensive jobs and the likely slower computer capital adoption resulting from the relatively low levels of human capital, by international standards.

Suggested Citation

  • Fonseca, Tiago & Lima, Francisco & Pereira, Sonia C., 2018. "Job polarization, technological change and routinization: Evidence for Portugal," Labour Economics, Elsevier, vol. 51(C), pages 317-339.
  • Handle: RePEc:eee:labeco:v:51:y:2018:i:c:p:317-339
    DOI: 10.1016/j.labeco.2018.02.003
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    2. Guyonne Kalb & Jordy Meekes, 2021. "Wage Growth Distribution and Changes over Time: 2001–2018," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 54(1), pages 76-93, March.
    3. Fonseca, Tiago & de Faria, Pedro & Lima, Francisco, 2019. "Human capital and innovation: the importance of the optimal organizational task structure," Research Policy, Elsevier, vol. 48(3), pages 616-627.
    4. Blien, Uwe & Dauth, Wolfgang & Roth, Duncan H.W., 2021. "Occupational routine intensity and the costs of job loss: evidence from mass layoffs," Labour Economics, Elsevier, vol. 68(C).
    5. Alessandro Arrighetti & Eleonora Bartoloni & Fabio Landini & Chiara Pollio, 2019. "Exuberant Proclivity Towards Non-Standard Employment:Evidence from Linked Employer-Employee Data," Working Papers 1905, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2019.
    6. Kobayashi, Toru & Yamamoto, Isamu, 2020. "Job tasks and wages in the Japanese labor market: Evidence from wage functions," Journal of the Japanese and International Economies, Elsevier, vol. 58(C).
    7. Barbieri, Laura & Mussida, Chiara & Piva, Mariacristina & Vivarelli, Marco, 2019. "Testing the employment and skill impact of new technologies: A survey and some methodological issues," MERIT Working Papers 2019-032, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    8. Du Yuhong & Wei Xiahai, 2020. "Task content routinisation, technological change and labour turnover: Evidence from China," The Economic and Labour Relations Review, , vol. 31(3), pages 324-346, September.
    9. Davide Consoli & Mabel Sánchez-Barrioluengo, 2016. "Polarization and the growth of low-skill employment in Spanish Local Labor Markets," Papers in Evolutionary Economic Geography (PEEG) 1628, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Nov 2016.
    10. Žilvinas Martinaitis & Aleksandr Christenko & Jonas AntanaviÄ ius, 2021. "Upskilling, Deskilling or Polarisation? Evidence on Change in Skills in Europe," Work, Employment & Society, British Sociological Association, vol. 35(3), pages 451-469, June.
    11. Sebastian, Raquel & Harrison, Scott, 2017. "Beyond technological explanations of employment polarisation in Spain," GLO Discussion Paper Series 154, Global Labor Organization (GLO).
    12. Sebastian Lago Raquel & Federico Biagi, 2018. "The Routine Biased Technical Change hypothesis: a critical review," JRC Working Papers JRC113174, Joint Research Centre (Seville site).
    13. De Dominicis, Piero, 2020. "Routinization and Covid-19: a comparison between United States and Portugal," MPRA Paper 101003, University Library of Munich, Germany.
    14. Araújo, Isabel & Carneiro, Anabela, 2020. "Educational Mismatches of Newly Hired Workers: Short and Medium-run Effects on Wages," GLO Discussion Paper Series 668, Global Labor Organization (GLO).
    15. Da Silva, António Dias & Laws, Athene, 2019. "Hours of work polarisation?," Working Paper Series 2324, European Central Bank.
    16. José António Pereirinha & Elvira Pereira, 2021. "Living Wages in Portugal: in search of dignity in a highly polarized labour market," Working Papers GHES - Office of Economic and Social History 2021/74, ISEG - Lisbon School of Economics and Management, GHES - Social and Economic History Research Unit, Universidade de Lisboa.
    17. Jinyoung Kim & Cyn‐Young Park, 2020. "Education, skill training, and lifelong learning in the era of technological revolution: a review," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 34(2), pages 3-19, November.

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    More about this item

    Keywords

    Technological change; Routinization; Job polarization; Employment; Wages;
    All these keywords.

    JEL classification:

    • 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
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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