Full Citation

Title: Where Have the Routine Workers Gone? A Study of Polarization Using Panel Data

Citation Type: Working Paper

Publication Year: 2012

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Abstract: Using a general equilibrium model with endogenous sorting of workers into occupations based on comparative advantage, this paper derives the effects of routine-biased technical change on occupational transition patterns and wage changes of individual workers. These predictions are then tested using data from the Panel Study of Income Dynamics (PSID) from 1976 to 2007. Consistent with the predictions of the model, occupational mobility patterns of routine workers show strong evidence of selection on ability. Workers of relatively high (low) ability are more likely to switch to non-routine cognitive (non-routine manual) occupations. Also consistent with the predictions of the model, there has been a significant increase over time in the relative wage premium in non-routine occupations. Workers staying in routine jobs therefore perform significantly worse in terms of wage growth than workers in any other type of occupation. Over long run horizons, switchers from routine to non-routine jobs also experience significantly faster wage growth than those who remain in the routine occupations.

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Authors: Cortes, Guido M.

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Publication Number: EDP-1224

Institution: The University of Manchester

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Publisher Location: Manchester, UK

Data Collections: IPUMS CPS

Topics: Labor Force and Occupational Structure, Methodology and Data Collection

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