Job polarization in Britain

Job polarization in Britain

Complex information processing programs will supplant labour in routine jobs, intense in many relatively simple and repetitive eye-brain-hand-sequences. Consequently workers will sort into nonrountine jobs requiring the flexible use of the brain-eye-hands-and legs. (Simon 1960).

The skill biased technical change hypothesis predicts that demand for skilled jobs is rising relative to that for unskilled jobs, while the recent paper by Autor, Levy, and Murnane ALM hypothesıs suggests a more subtle impact of technology on the demand for labour of different skills.

The 'non-routine' tasks which are complementary to technology as skilled professional and managerial jobs are benefiting.

'Non-routine' unskilled jobs such as cleaning are not directly affected.

Studies show that in Britain, in the last 30 years, there has been a very big increase in the number of high paid jobs, and an increase in the number of low paid service jobs, matching job polarization prediction of the ALM hypothesis.

(Data used the New Earnings Survey NES and the labour force survey LFS)

Ref:
Maarten Goos & Alan Manning, Lousy & Lovely jobs, The rising polarization of work in Britain (2007)
David Autor, Frank Levy, Richard Murnane, the Skill contect of recent technological change, Quarterly Journal of Economic CXVİİİ (2003)
David Autor, Laurence Katz, Changes in the wage Structure and Earning inequality in Hand book of Labour Economics, Vol. 3 A



Geography matters

One study shows that firms benefit greatly from proximity to a large supply of inputs and good market access. Firms with the best supply or market access can afford to pay more than 20% higher wages than those with the poorest access. Labour pooling is less quantitativly important and positive effects from techneology spillovers are not found. These results are robust to controlling for more standard explanations of wage variation such as skill levels and firm size, and infrastructure variables. The results are also robust ot a set of sensitivity tests designed to test the extent of endogeneity of the market access and supply access variables. İt was found that the benefits of vertical linkages are highly localized. Firms do benefit from vertical linkages, but not if they are located in periphery. The large agglomeration benefits arizing from vertical linkages combined with the high localization of the benefits can explain why firms are reluctant to relocate to low wage areas. These findings underscore the difficulty governments around the world have in generating economic growth in far flung regions where the citizens are often the poorest and benefit the least from economic growth. Large regional inequalities are a worldwide phenomenon and governments continue to spend large sums of money to try to attract firms to poorer regions. Overcoming the attraction of existing agglomerations is likely to continue to be a difficult task.

Ref.:
Lisa Cameron, Vivi Alatas, The İmpact of minimum wages on employment in a low income country, World Bank policy research working paper 2985, (2003) 1-31.
Lisa Cameron, Mary Amiti, Economic Geography & Wages, CEPR discussion paper, 2004


Economic Growth

Economic growth can affect fertility because with more income parental human capital improves and thus raises the return to investment in the human capital of children relative to investment in the number of children (Lewis & Becker, 1973). With growth the real wage of women rises, which also leads to lower fertility. The impact of the birth rate on economic growth in China over 20 years was examined by using a panel data set of 28 provinces. Becasue Chinese' one child policy, started in late 1970s, applied only to the Han Chinese but not to minorities this unique policy allowed using the proportion of minorities in a province as an instrumental variable to identify the causal effect of the birth rate on economic growth. The study found that birth rate has a negative impact on economic growth.

Ref.:
Lewis Arthur, Economic developmentswith unlimited supplies of labour, Manchester school 22 (1954)
Galor, Odel, David Weil, The gender gap, fertility, and growth, American Economic Review, 1996