Inequality and Specialization: The Growth of Low-Skill Service Jobs in the United States

David Autor and David Dorn

No 4290, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: After a decade in which wages and employment fell precipitously in low-skill occupations and expanded in high-skill occupations, the shape of U.S. earnings and job growth sharply polarized in the 1990s. Employment shares and relative earnings rose in both low and high-skill jobs, leading to a distinct U-shaped relationship between skill levels and employment and wage growth. This paper analyzes the sources of the changing shape of the lower-tail of the U.S. wage and employment distributions. A first contribution is to document a hitherto unknown fact: the twisting of the lower tail is substantially accounted for by a single proximate cause ? rising employment and wages in low-education, in-person service occupations. We study the determinants of this rise at the level of local labor markets over the period of 1950 through 2005. Our approach is rooted in a model of changing task specialization in which "routine" clerical and production tasks are displaced by automation. We find that in labor markets that were initially specialized in routine-intensive occupations, employment and wages polarized after 1980, with growing employment and earnings in both high-skill occupations and low-skill service jobs.

Keywords: inequality; polarization; occupational choice; skill demand; technological change; job tasks (search for similar items in EconPapers)
JEL-codes: E24 J24 J31 J62 O33 (search for similar items in EconPapers)
Pages: 57 pages
Date: 2009-07
New Economics Papers: this item is included in nep-hrm, nep-lab, nep-ltv and nep-mac
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Citations: View citations in EconPapers (66)

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