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Title: Job Polarization: Market Responses to Interindustry Wage Differentials

Citation Type: Miscellaneous

Publication Year: 2013

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Abstract: In spite of the rapid growth in job polarization literature, different aspects of job polarization across industries have not yet been studied extensively. In this paper, we show that (1) the degree of job polarization is not the same across different industries and that (2) this observation is related to interindustry wage differentials. In particular, we find that job polarization is more pronounced in industries which paid relatively higher wages than other industries since the early 1980s. We argue that this phenomenon can be explained as the dynamic responses of firms to interindustry wage differentials as shown by Borjas and Ramey (2000) : firms in industries with relatively higher industry wage premia respond by replacing workers with other production factors such as capital. As it is easiest for firms to replace 'middle occupation jobs' with certain types (Information, Communication, and Technology) of capital, labor demand declines disproportionately for firms with higher relative wages, which results in different aspects of job polarization across industries. * Preliminary and Incomplete. This version does not include model, which will be added later. We would like to thank Valerie Ramey for her insightful and helpful comments.

Url: https://economicdynamics.org/meetpapers/2013/paper_1200.pdf

Url: https://www.sole-jole.org/14246.pdf

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Authors: Shim, Myungkyu; Yang, Hee-Seung

Publisher: UC San Diego

Data Collections: IPUMS USA

Topics: Labor Force and Occupational Structure

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