Job Polarization and the Declining Fortunes of the Young: Evidence from the United Kingdom

By Era Dabla-Norris, Carlo Pizzinelli, Jay Rappaport

October 11, 2019

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Era Dabla-Norris, Carlo Pizzinelli, and Jay Rappaport. Job Polarization and the Declining Fortunes of the Young: Evidence from the United Kingdom, (USA: International Monetary Fund, 2019) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper uses a life-cycle framework to document new stylized facts about the nexus between job polarization and earnings inequality. Using quarterly labor force data for the UK over the period 2000-2018, we find clear life-cycle profiles in the probability of being employed within each occupation type and wages earned therein. Cohort plots and econometric analysis suggest that labor market outcomes and prospects have gradually worsened for the young. These adverse trends are particularly significant for low-skill women: estimated cohort effects point to a fall in wages within each occupation as well as a lower propensity of being employed in abstract-task occupations. We also find evidence of general occupational downgrading in the UK, with more educated workers taking up fewer high-skill occupations than they did in the past. Our analysis informs the policy debate over appropriate measures needed to reduce skill mismatches and alleviate labor market transitions.

Subject: Education, Employment, Gender, Labor, Labor force, Labor markets, Wages, Women

Keywords: Age group, Aggregate wage slump, Cohort effect, Employment, Employment share, Inter-generational inequality, Job polarization, Labor force, Labor markets, Lifetime earnings, Occupational choice, Stagnating wage, Wage differential, Wage growth, Wage regression, Wage slowdown, Wage stagnation, Wages, Wages clerk, Women, Worker group, WP

Publication Details

Pages:

55
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2019/216
Stock No:

WPIEA2019216
ISBN:

9781513515410
ISSN:

1018-5941

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