Essays on tasks, technology, and trends in the labor market

Abstract

This thesis contains three essays on the role of tasks and technology in explaining the trends in reallocation of employment across occupations and sectors, and inequalities in the labor market. The first two chapters focus on the task content of occupations with special emphasis on the effect of interpersonal interactions in the changing structure of employment in the labor market. Chapter 1 studies structural change of employment at the task level. Interactions with customers are a key friction against the implementation of potentially better production styles and technologies, since customers are hard to train and should be satisfied according to their tastes. Using a wide range of data sources on tasks, detailed occupation employment, labor productivity, and computer adoption, Chapter 1 develops a novel task measure, interpersonal-service task intensity, to study the growing importance of service activity in the US labor market in recent decades and explores its linkages with technical change. The chapter explains the empirical findings with a model of structural change at the task level which suggests two distinct roles for interpersonal-service intensity and task-routinizability. Concerned with the reallocation of employment jointly across occupations and sectors, Chapter 2 quantifies the impact of interpersonal-service task intensity and routinization on job polarization and structural change of sector employment. I estimate a task-biased technical change model which is capable to address occupation-specific and sector-specific technical change separately and show that substantial portion of occupational and sectoral employment reallocation between 1987 and 2014 in the US can be explained by the two task aspects. While both types of tasks are significant drivers of job polarization, interpersonal-service tasks stand out in explaining the growth of service sector employment. Using the framework I also suggest answers to several issues in the related literature. Chapter 3 switches the focus of study from the task content to skills while keeping the occupation-based perspective. The last chapter studies the importance of within-occupation heterogeneity of skills in understanding the rising labor market inequalities. I document that employment and wage growth of occupations tend to increase monotonically with various measures of skill intensity since 1980 in the US, in contrast to the existing interpretation of labor market polarization along occupational wages. I establish robustness of the documented fact, explore the sources of the seemingly contrasting finding and argue that labor market polarization cannot be interpreted as polarization of skills that are comparable across occupations. The chapter reconciles the documented facts in an extended version of the canonical skill-biased technical change model which incorporates many occupations and within-occupation heterogeneity of skill types.