Explaining job polarization: routine-biased technological change and offshoring

Explaining job polarization: routine-biased technological change and offshoring

2014 | Maarten Goos, Alan Manning, and Anna Salomons
The paper by Goos, Manning, and Salomons (2014) examines job polarization in 16 Western European countries from 1993 to 2010. It finds that job polarization is widespread, with a decline in middle-skill jobs and increases in both high- and low-skill jobs. The authors propose a model that attributes this polarization to routine-biased technological change (RBTC) and offshoring. RBTC refers to technological changes that favor routine tasks, while offshoring involves moving tasks to other countries. The model shows that RBTC is more significant than offshoring in explaining job polarization. The model also explains both within-industry and between-industry components of job polarization. Within industries, there is a shift away from routine jobs, while between industries, there is a shift towards industries with higher routine tasks. The study uses data on employment, routineness, and offshorability of occupations, as well as industry output and costs. The results suggest that RBTC and offshoring are key factors in job polarization, with RBTC being the more important factor. The paper concludes that job polarization is a widespread phenomenon in advanced economies, driven by both within- and between-industry changes. The model provides a framework for understanding the economic mechanisms behind job polarization.The paper by Goos, Manning, and Salomons (2014) examines job polarization in 16 Western European countries from 1993 to 2010. It finds that job polarization is widespread, with a decline in middle-skill jobs and increases in both high- and low-skill jobs. The authors propose a model that attributes this polarization to routine-biased technological change (RBTC) and offshoring. RBTC refers to technological changes that favor routine tasks, while offshoring involves moving tasks to other countries. The model shows that RBTC is more significant than offshoring in explaining job polarization. The model also explains both within-industry and between-industry components of job polarization. Within industries, there is a shift away from routine jobs, while between industries, there is a shift towards industries with higher routine tasks. The study uses data on employment, routineness, and offshorability of occupations, as well as industry output and costs. The results suggest that RBTC and offshoring are key factors in job polarization, with RBTC being the more important factor. The paper concludes that job polarization is a widespread phenomenon in advanced economies, driven by both within- and between-industry changes. The model provides a framework for understanding the economic mechanisms behind job polarization.
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