Offshoring, Automation, Low-Skilled Immigration, and Labor Market Polarization

Federico Mandelman and Andrei Zlate

American Economic Journal: Macroeconomics, 2022, vol. 14, issue 1, 355-89

Abstract: We show that the observed polarization of employment toward the high- and low-skill occupations disappears when only native workers are considered. Instead, low-skilled immigration explains employment growth at the low tail of the skill distribution. Moreover, while employment rose, wages remained subdued in low-skill occupations. A data-disciplined structural model accounts for this evidence: Offshoring and automation negatively affect middle-skill occupations but enhance employment and wages for the high-skilled. Low-skill employment is sheltered from offshoring and automation, as it consists of manual, non-tradable services. However, low-skilled immigration depresses low-skill wages and encourages native workers to move into skilled occupations through training.

JEL-codes: F16 J24 J31 J61 M53 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (11)

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DOI: 10.1257/mac.20180205

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