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Horizontal and Vertical Polarization: Task-Specific Technological Change in a Multi-Sector Economy

Sang Yoon (Tim) Lee and Yongseok Shin

No 23283, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We analyze the effect of technological change in a novel framework that integrates an economy's skill distribution with its occupational and industrial structure. Individuals become managers or workers based on their managerial vs. worker skills, and workers further sort into a continuum of tasks (occupations) ranked by skill content. Our theory dictates that faster technological progress for middle-skill tasks not only raises the employment shares and relative wages of lower- and higher-skill occupations among workers (horizontal polarization), but also raises those of managers over workers as a whole (vertical polarization). Both dimensions of polarization are faster within sectors that depend more on middle-skill tasks and less on managers. This endogenously leads to faster TFP growth of such sectors, whose employment and value-added shares shrink if sectoral goods are complementary (structural change). We present several novel facts that support our model, followed by a quantitative analysis showing that task-specific technological progress--which was fastest for occupations embodying routine-manual tasks but not interpersonal skills--is important for understanding changes in the sectoral, occupational, and organizational structure of the U.S. economy since 1980.

JEL-codes: J24 J31 L16 O14 O33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lma and nep-tid
Date: 2017-03
Note: EFG PR
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Related works:
Working Paper: Horizontal and Vertical Polarization: Task-Specific Technological Change in a Multi-Sector Economy (2017) Downloads
Working Paper: Horizonatal and Vertical Polarization: Task-Specific Technological Change in a Multi-Sector Economy (2017) Downloads
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