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

56 Pages Posted: 8 Nov 2019

See all articles by Era Dabla-Norris

Era Dabla-Norris

International Monetary Fund (IMF)

Carlo Pizzinelli

International Monetary Fund (IMF)

Jay Rappaport

International Monetary Fund (IMF)

Date Written: October 2019

Abstract

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.

Keywords: Cost of living, Skilled labor, Labor markets, Unemployment, Real sector, Job polarization, Occupational choice, Inter-generational inequality, WP, lifetime earnings, high-skill, LFS, worker group, low-skill

JEL Classification: J11, J24, J31, E2, E01, J3, D4, Z13

Suggested Citation

Dabla-Norris, Era and Pizzinelli, Carlo and Rappaport, Jay, Job Polarization and the Declining Fortunes of the Young: Evidence from the United Kingdom (October 2019). IMF Working Paper No. 19/216, Available at SSRN: https://ssrn.com/abstract=3482300

Era Dabla-Norris (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Carlo Pizzinelli

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Jay Rappaport

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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