Will Job Polarisation Continue? Responses

Professor Georg Graetz

1. Do you think labour market polarisation is likely to continue to deepen in the foreseeable future, and why?

b) likely

In a paper joint with Andy Feng, we show that the replacement of middle wage jobs by new technologies is likely due to firms’ responding to incentives, and not so much due to idiosyncratic features of information technology (see here for the latest version https://sites.google.com/site/georggraetz/files/machines.pdf). It turns out that job polarisation is not a new phenomenon, and previous episodes of automation were also associated with a hollowing out of employment. To be sure, I am not advocating “technological determinism” – educational and labour market institutions certainly have an impact on the employment and wage structures, as well. But there seems to be a strong tendency of technology to polarise the labour market.

2. As a citizen, do you think public policy should try to mitigate labour market polarisation? If so, how?

Public policy should ensure that everyone has access to an education system that is responsive to the changing demands of the labour market, and should assist those workers who were replaced by technology in retraining for a different career. I do not have a strong view on whether education should be publicly or privately provided, but I do think there is a role for the state in overcoming credit frictions that hinder educational investments, as well as in providing insurance.

Professor Lawrence Mishel

1. Do you think labour market polarisation is likely to continue to deepen in the foreseeable future, and why?

a) Job polarization has not really been present in the US since 1999/2000 though the last few years show a bit of it. But it doesn’t really matter whether it does or does not since polarization has no bearing on wage trends: http://www.epi.org/publication/technology-inequality-dont-blame-the-robots/ “Occupational employment trends do not drive wage patterns or wage inequality.” I wouldn’t be surprised if polarization resumes but we shouldn’t be obsessed about it at all. It doesn’t tell us much.

2. As a citizen, do you think public policy should try to mitigate labour market polarisation? If so, how?

I think public policy should focus on generating robust wage growth across-the-board.

Wage Inequality: A Story of Policy Choices

http://www.epi.org/publication/wage-inequality-story-policy-choices/

Raising America’s Pay: Why It’s Our Central Economic Policy Challenge

http://www.epi.org/publication/wage-inequality-story-policy-choices/

The Agenda to Raise America’s Pay

http://www.epi.org/pay-agenda/

How to Raise Wages: Policies That Work and Policies That Don’t

http://www.epi.org/publication/how-to-raise-wages-policies-that-work-and-policies-that-dont/

Professor David Autor

1. Do you think labour market polarisation is likely to continue to deepen in the foreseeable future, and why?

a) unlikely

Most trends do not continue indefinitely. I think the technological forces behind the decline of middle-skill jobs have largely played out. Technology will continue to reshape job tasks and labor demand, but the next frontier of this phenomenon lies elsewhere.

Really, I’m just speculating. It’s just my observation that when everyone finally agrees that something is “happening,” it’s probably already happened — and may soon be reversing. More substantively, I see the next frontiers of automation has lying in (1) dexterous physical tasks and (2) information intensive expert tasks.

2. As a citizen, do you think public policy should try to mitigate labour market polarisation? If so, how?

Not polarization per se. I think that public policy should attempt to help workers to adjust to exogenous adverse labor market demand shocks that diminish their earnings and reduce the value of their stock of human capital.

Professor John Van Reenen

1. Do you think labour market polarisation is likely to continue to deepen in the foreseeable future, and why?

b) likely

2. As a citizen, do you think public policy should try to mitigate labour market polarisation? If so, how?

Yes, improving skills and education to meet new demands.

Laura Gardiner

There is a definite trend of technology replacing the most routine jobs (which started out in the middle of the wage distribution) which is likely to continue. And this is something government should be mindful of and act upon if it has adverse consequences, for example in terms of individual progression prospects in certain sectors or the fortunes of displaced workers. (However, I’m not at all convinced that automation this time round is significantly different to before and about to cause mass unemployment rather than spur a range of new jobs. In fact, I think that in many ways government should be focusing on more automation in this country to help deal with our woeful productivity performance.)

However I think that casting this phenomenon in terms of “polarisation” is the wrong way to think about it, because there is very limited evidence that the labour market is becoming more polarised. Even if jobs that started out in the middle of the pay distribution have declined, jobs moving around this distribution, new jobs cropping up all over the place, and earnings dispersion within occupations means that the labour market doesn’t look to be a particularly different shape now than it was 20 years ago (in contrast to what’s happened in the US, to some extent).

So I suppose to directly answer your questions:

1. Do you think labour market polarisation is likely to continue to deepen in the foreseeable future, and why?

I don’t think polarisation is a real problem or the right way of focusing question.

2. As a citizen, do you think public policy should try to mitigate labour market polarisation? If so, how?

I would say that public policy should act to mitigate any adverse consequences of automation, for example via redistribution, or progression and skills policies, but not polarisation per se. And that any protectionist anti-automation policy would be particularly misguided given the current productivity position.

Craig Holmes

1. Do you think labour market polarisation is likely to continue to deepen in the foreseeable future, and why?

Likely. However, I think it will affect different sorts of jobs in the past – for example, more low-skill service jobs are able to be automated, for example in retail or catering. Personal service jobs are likely to grow. In addition, technology is likely to be able to replace a wider range of high skill jobs as well, but I would expect the best paid high skill jobs to be immune to this, and indeed to continue to benefit from new digital technologies.

2. As a citizen, do you think public policy should try to mitigate labour market polarisation? If so, how?

I certainly think public policy should be directed to dealing with the consequences of this polarisation, and that where wage inequality increases as a result it should be prepared to redistribute more. However, I don’t think pay is everything, and that in cases where the increase in productivity or reduction in costs that new technology bring about significant losses of job quality in addition to changes in pay, I would support policies that reduced these sorts of investments in the first place. The state, as a huge employer itself and creator of employment elsewhere, can have a big impact in terms of the nature of the work it creates directly, and is somewhat less subject to competitive market pressures that might be driving firms towards new technologies at the expense of job quality.

Dr Andrea Salvatori

1. Do you think labour market polarisation is likely to continue to deepen in the foreseeable future, and why?

Hard to tell because it is really not clear why we have seen polarisation in some places, so it is hard to judge if the process will continue. The evidence that the phenomenon is primarily driven by technology, for example, is not so clear (for example: why did polarisation not occur in the US in the 2000s?). And, in any case, even if we decide to believe that the decline in middling occupations is primarily driven by automation, the argument that the range of tasks that can be automated is expanding would imply that we should not see substitution concentrated in the middle anymore. On the whole, I would argue that it is unlikely that polarisation is going to be the dominant trend for the future, but this is based more on the heterogeneity of patterns that we already observe across countries (and within countries over time) than on some deep understanding of the forces driving the changes in the occupational structure in advanced countries.

2. As a citizen, do you think public policy should try to mitigate labour market polarisation? If so, how?

I don’t think public policy should try and mitigate polarisation per se. It should, however, pay close attention to whether changes in the occupational structure change career opportunities for different groups in unequal ways. In my research, I find that as the UK labour market has polarised, non-graduates have become increasingly concentrated in lower paid jobs and more graduates have moved to jobs traditionally done by people with lower qualifications. A key question there is what types of graduates are being driven down the occupational ladder – whose chances are changing as a result of the changes in the structure of the labour market.

Adam Corlett

1. Do you think labour market polarisation is likely to continue to deepen in the foreseeable future, and why?

I do think that we are likely to see a continued trend of the most routine jobs being replaced (and that these are disproportionately in the middle of the income distribution).

However, my own view is that “labour market polarisation” is not a real problem: i.e. the labour market is not becoming polarised, and even if there is the kind of hollowing out that our work and others’ shows, those lost middle jobs are being replaced by other jobs and by changes in the earnings distribution.

2. As a citizen, do you think public policy should try to mitigate labour market polarisation? If so, how?

Public policy should definitely respond to any technological unemployment of the kind you talk about in your blog – should that happen – by redistributing income/wealth.

 

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