Explaining Job Polarization: The Roles of Technology, Offshoring and Institutions

35 Pages Posted: 14 Jan 2012

See all articles by Maarten Goos

Maarten Goos

KU Leuven - Faculty of Business and Economics (FEB)

Alan Manning

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP)

Anna Salomons

Utrecht University - School of Economics; KU Leuven - Center for Economic Studies

Date Written: December 1, 2011

Abstract

This paper develops a simple and empirically tractable model of labor demand to explain recent changes in the occupational structure of employment as a result of technology, offshoring and institutions. This framework takes account not just of direct effects but indirect effects through induced shifts in demand for different products. Using data from 16 European countries, we find that the routinization hypothesis of Autor, Levy and Murnane (2003) is the most important factor behind the observed shifts in employment but that offshoring does play a role. We also find that shifts in product demand are acting to attenuate the impacts of recent technological progress and offshoring and that changes in wage-setting institutions play little role in explaining job polarization in Europe.

Keywords: labor demand, technology, globalization, polarization

JEL Classification: J21, J23, J24

Suggested Citation

Goos, Maarten and Manning, Alan and Salomons, Anna, Explaining Job Polarization: The Roles of Technology, Offshoring and Institutions (December 1, 2011). Available at SSRN: https://ssrn.com/abstract=1983952 or http://dx.doi.org/10.2139/ssrn.1983952

Maarten Goos (Contact Author)

KU Leuven - Faculty of Business and Economics (FEB) ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

HOME PAGE: http://www.econ.kuleuven.be/maarten.goos

Alan Manning

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE
United Kingdom
(44 20) 7955 6078 (Phone)

Anna Salomons

Utrecht University - School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, +31 30 253 7373 3584 EC
Netherlands

KU Leuven - Center for Economic Studies ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

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