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Can the Labor Demand Curve Explain Job Polarization?

Author

Listed:
  • Peichl, Andreas

    (Univ. München ; IZA)

  • Popp, Martin

    (Institute for Employment Research (IAB), Nuremberg, Germany)

Abstract

"In recent decades, many industrialized economies have witnessed a pattern of job polarization. While shifts in labor demand, namely routinization or offshoring, constitute conventional explanations for job polarization, there is little research on whether shifts in labor supply along the labor demand curve may equally result in job polarization. In this study, we assess the impact of labor supply shifts on job polarization. To this end, we determine unconditional wage elasticities of labor demand from a unique estimation of a profit-maximization model on linked employer-employee data from Germany. Unlike standard practice, we explicitly allow for variations in output and find that negative scale effects matter. Both for a skill- and a novel task-based division of the workforce, our elasticity estimates show that supply shifts from immigration and a decline in collective bargaining successfully explain occupational employment patterns during the 1990s." (Author's abstract, IAB-Doku) ((en))

Suggested Citation

  • Peichl, Andreas & Popp, Martin, 2022. "Can the Labor Demand Curve Explain Job Polarization?," IAB-Discussion Paper 202221, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    • Handle: RePEc:iab:iabdpa:202221
    DOI: 10.48720/IAB.DP.2221
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    Cited by:

    1. Martin Popp, 2023. "How elastic is labor demand? A meta-analysis for the German labor market," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 57(1), pages 1-21, December.
    2. Maximilian Blömer & Elena Herold & Max Lay & Andreas Peichl & Ann‐Christin Rathje & Paul Schüle & Anne Steuernagel, 2024. "Labour market trends and income inequality in Germany, 1983–2020," Fiscal Studies, John Wiley & Sons, vol. 45(3), pages 325-342, September.

    More about this item

    Keywords

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    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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