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Polarization, employment and the minimum wage: Evidence from European local labor markets

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  • Maarek, Paul
  • Moiteaux, Elliot

Abstract

The labor market is becoming increasingly polarized as routine jobs disappear. In the flexible US labor market, this has had a limited impact on employment due to the strong employment growth in low-paying manual occupations for workers who are not able to reallocate to high-paying abstract occupations. This may not be the case in some rigid wage European economies, which are capable of creating fewer low-paying manual jobs. We study the effect of a decrease in the proportion of routine jobs on employment and participation rates, conditionally on the level of the minimum wage, in European local labor markets. Our OLS and IV estimates show that the polarization process has a negative impact on employment and participation rates in high minimum wage countries only.

Suggested Citation

  • Maarek, Paul & Moiteaux, Elliot, 2021. "Polarization, employment and the minimum wage: Evidence from European local labor markets," Labour Economics, Elsevier, vol. 73(C).
  • Handle: RePEc:eee:labeco:v:73:y:2021:i:c:s0927537121001111
    DOI: 10.1016/j.labeco.2021.102076
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    1. Sasiwimon Warunsiri Paweenawat & Lusi Liao, 2022. "Brain over Brawn: Job Polarization, Structural Change, and Skill Prices," PIER Discussion Papers 189, Puey Ungphakorn Institute for Economic Research.

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    More about this item

    Keywords

    polarization; employment; participation; minimum wage; ICT; routine occupations;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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