Inequality and Specialization: The Growth of Low-Skill Service Jobs in the United States

57 Pages Posted: 21 Jul 2009

See all articles by David H. Autor

David H. Autor

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

David Dorn

University of Zurich - Department of Economics; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute)

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Abstract

After a decade in which wages and employment fell precipitously in low-skill occupations and expanded in high-skill occupations, the shape of U.S. earnings and job growth sharply polarized in the 1990s. Employment shares and relative earnings rose in both low and high-skill jobs, leading to a distinct U-shaped relationship between skill levels and employment and wage growth. This paper analyzes the sources of the changing shape of the lower-tail of the U.S. wage and employment distributions. A first contribution is to document a hitherto unknown fact: the twisting of the lower tail is substantially accounted for by a single proximate cause − rising employment and wages in low-education, in-person service occupations. We study the determinants of this rise at the level of local labor markets over the period of 1950 through 2005. Our approach is rooted in a model of changing task specialization in which "routine" clerical and production tasks are displaced by automation. We find that in labor markets that were initially specialized in routine-intensive occupations, employment and wages polarized after 1980, with growing employment and earnings in both high-skill occupations and low-skill service jobs.

Keywords: skill demand, job tasks, inequality, polarization, technological change, occupational choice

JEL Classification: E24, J24, J31, J62, O33

Suggested Citation

Autor, David H. and Dorn, David, Inequality and Specialization: The Growth of Low-Skill Service Jobs in the United States. IZA Discussion Paper No. 4290, Available at SSRN: https://ssrn.com/abstract=1434624

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David Dorn

University of Zurich - Department of Economics ( email )

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IZA Institute of Labor Economics

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Germany

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