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Thursday, February 02, 2006

The Polarization of the U.S. Labor Market

More evidence on growing wage inequality, a trend this paper finds is most severe in the upper half of the wage distribution. The results are consistent with an explanation based upon computerization:

The Polarization of the U.S. Labor Market, by David H. Autor, Lawrence F. Katz, and Melissa S. Kearney, NBER WP 11986, January 2006: Abstract This paper analyzes a marked change in the evolution of the U.S. wage structure over the past fifteen years: divergent trends in upper-tail (90/50) and lower-tail (50/10) wage inequality. We document that wage inequality in the top half of the distribution has displayed an unchecked and rather smooth secular rise for the last 25 years... Wage inequality in the bottom half of the distribution also grew rapidly from 1979 to 1987, but it has ceased growing (and for some measures actually narrowed) since the late 1980s. ... We characterize these patterns as the “polarization” of the U.S. labor market, with employment polarizing into high-wage and low-wage jobs at the expense of middle-wage work. We show how a model of computerization in which computers most strongly complement the non-routine (abstract) cognitive tasks of high-wage jobs, directly substitute for the routine tasks found in many traditional middle-wage jobs, and may have little direct impact on non-routine manual tasks in relatively low-wage jobs can help explain the observed polarization of the U.S. labor market. [AEA Web version]

    Posted by on Thursday, February 2, 2006 at 12:06 AM in Economics, Income Distribution, Technology | Permalink  TrackBack (0)  Comments (1)

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