key term - Job Polarization

Definition

Job polarization refers to the phenomenon where employment growth occurs primarily in high-skill, high-wage occupations and low-skill, low-wage occupations, while middle-skill, middle-wage jobs decline. This trend is observed in many developed economies and is driven by technological advancements and globalization.

5 Must Know Facts For Your Next Test

1. Job polarization has been observed in the United States and other developed countries since the 1980s, with the hollowing out of middle-skill occupations.
2. Technological advancements, such as automation and artificial intelligence, have disproportionately impacted routine, middle-skill jobs, leading to their decline.
3. Globalization and the offshoring of manufacturing and certain service jobs have also contributed to the erosion of middle-skill employment.
4. The growth in high-skill, high-wage occupations, such as in the technology and professional services sectors, has been driven by the increasing demand for specialized skills.
5. The expansion of low-skill, low-wage jobs, often in the service industry, has been fueled by the rising demand for personal services and the difficulty in automating certain tasks.

Review Questions

• Explain the key drivers of job polarization in the United States.
  • The primary drivers of job polarization in the United States are technological advancements, particularly the automation of routine, middle-skill tasks, and the globalization of the economy, which has led to the offshoring of many manufacturing and service jobs. These forces have disproportionately impacted middle-skill occupations, leading to their decline, while creating growth in both high-skill, high-wage jobs and low-skill, low-wage jobs.
• Analyze the impact of job polarization on the labor market and income inequality.
  • Job polarization has contributed to the widening of income inequality, as the growth in high-skill, high-wage occupations and low-skill, low-wage jobs has led to a hollowing out of the middle class. This trend has also reduced the availability of middle-skill, middle-wage jobs that have traditionally provided a pathway to the middle class. The decline of these jobs has made it more difficult for workers without specialized skills to achieve upward mobility, further exacerbating income inequality.
• Evaluate potential policy responses to address the challenges posed by job polarization.
  • Policymakers have explored various strategies to address the challenges posed by job polarization, such as investing in education and workforce development programs to equip workers with the skills necessary for high-wage, high-skill jobs; implementing policies to support the transition of displaced middle-skill workers into new occupations; and exploring ways to create new middle-skill jobs through targeted economic development initiatives. Additionally, some have advocated for policies that promote economic diversification, encourage the growth of middle-skill industries, and address the root causes of income inequality.

Related terms

Skill-Biased Technological Change: The process by which new technologies disproportionately increase the demand for high-skilled workers relative to low-skilled workers.

Routine Task Automation: The replacement of routine, repetitive tasks traditionally performed by middle-skill workers with automated processes and machinery.

Outsourcing:

The practice of contracting work to external providers, often in low-wage countries, which can lead to the decline of middle-skill jobs in the domestic economy.