Employment and wage dynamics in the electricity sector: Evidence from Portugal 2002–2020

Abstract

Exploring a rich administrative matched employer-employee longitudinal dataset over the 2002–2020 period and a task-based approach, this study investigates to what extent the recent paradigm shift in the electricity sector has affected the structure of employment and wages in the Portuguese case. Our results show that the liberalization in the sector led to the entry of new players and firms' downsizing of the workforce, most notably in occupations involving routine cognitive tasks and non-routine manual tasks. In two decades, the employment share of occupations involving non-routine cognitive tasks (abstract or interactive) doubled, from 29.7% in 2002 to 58.1% in 2020. Regarding wage premiums, the results reveal a clear positive trend in real hourly wages for all types of occupations in the sector. However, we observe a lower wage growth acceleration for workers employed in routine (cognitive or manual) occupations, when compared with similar workers employed in non-routine occupations (cognitive or manual). Our findings are partly consistent with the skill-biased and routine-biased technological change hypotheses in the sense that we observe, respectively, a skill up-grading translated into an increase in employment share in non-routine cognitive occupations and a substantial decline in employment share in routine cognitive occupations.