Automation and Job Polarization: On the Decline of Middling Occupations in Europe

Abstract

Using data from 10 Western European countries, I provide evidence that the fall of prices of information technologies (IT) is associated with a lower share of employment in middle wage occupations and a higher share of employment in high wage occupations. The decline of IT prices has no robust effect on the share of employment in the lowest paid occupations. Similar results hold within gender, age and education-level groups, with notable differences in these groups. For instance, the share of employment in high wage occupations among females has increased more than among males with the fall of IT prices. This is consistent with arguments that women hold a comparative advantage in communication and social skills, which are in demand in high wage occupations.