The Causes and Consequences of Job Polarization, and their Future Perspectives

Job polarization is a major trend that took place in advanced countries’ labor markets over the past several decades. This article uses administrative data as well as established sources from the literature to achieve three aims: first, it shows how the rise of high- and low-wage occupations, and the commensurate decline of traditional mid-wage occupations, has had adverse effects on the less-skilled share of the workforce. It then identifies the underlying driving forces of job polarization, which include biased technological changes, international trade and offshoring, and pervasive shifts of the industry structure, among others. Finally, the article provides an outlook of the trends to come, for example, whether in future some high-wage jobs may decline, and discusses the interaction with policy.