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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 888, Working Papers from Queen Mary University of London, School of Economics and Finance

Abstract: We construct a multi-layer model of skills, occupations, and sectors. Technological progress among middle-skill occupations raises the employment shares and relative wages of lower- and higher-skill occupations (horizontal polarization), and those of managers over workers (vertical polarization). Polarization is faster within sectors that rely more on middle-skill workers, endogenously boosting their TFP. This shrinks their employment and output shares (structural change) if sector outputs are complementary. We empirically validate our theoretical predictions, and show that task-specific technological progress, which was faster for routine-manual tasks and slower for interpersonal tasks, played a major role in transforming the U.S. economy since 1980.

Keywords: job polarization; structural change; wage inequality (search for similar items in EconPapers)
JEL-codes: J24 J31 L16 O14 O33 (search for similar items in EconPapers)
Date: 2019-07-02
New Economics Papers: this item is included in nep-ino, nep-lma and nep-tid
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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: 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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