Job polarization in Italy: structural change and routinization

Abstract

This paper analyzes the role of structural change and the routinization hypothesis as concurrent explanations for job polarization in Italy over a fifteen-year period: 2004-2019. We observe that, even though the structural change pattern of Italian employment is characterized by the pronounced contraction of the most routine-intensive sector of the economy – i.e. the manufacturing sector – the disappearance of routine employment is a more generalized phenomenon that is affecting transversally all sectors. Indeed, by means of a standard shift-share decomposition method, the contraction of routine employment in Italy turns out to be marginally driven by the structural change pattern and the decline of the manufacturing sector – with only a negligible 20 percent of the total contraction attributable to the between-industry dimension. We find instead robust evidence in favor of the technological argument. The routinization hypothesis is tested with OLS and 2SLS models by exploiting industry-province cell variations and results point out that routine-tasks specialization does significantly increase employment in low-skill occupations for 6 out of 8 broad industries covering around 90 percent of non-farm private employment.