Job polarization in the new economy in Danish cities: location, size, and the role of the public sector

In this paper we examine the geographic patterns of employment growth and employment polarization in small and medium-sized cities (SMCs) in Denmark during the rise of the new economy. The geography of employment polarization in Danish cities is examined using register-based employment data on occupations and wages divided into the public and private sectors in the period 1993–2006; it therefore covers a long period of transformation and growth in the Danish economy. We conclude that employment growth is characterized by employment polarization combined with growth in low- and high-wage employment and a decline in medium-wage employment. However, these patterns of polarization differ across the public and private sectors, as well as by geography. While local labour market (LLM) size, city position and city specialization influence the geography of private-sector employment growth and polarization, municipal population and composition influence the geography of public-sector growth patterns across wage levels. Finally, public and private employment are positively associated within SMCs, predominantly driven by the positive association between public employment and private-sector low-wage employment. However, public employment is not associated with an increase in private low-wage employment in more remote areas.