Abstract
This paper explores the distributional consequences of technological change on midskilled routine workers in Switzerland in three steps: (1) The first part studies aggregate trends in the labor market and confirms the pattern of an eroding middle: The disadvantages of technological progress are concentrated on routine workers whose share in the labor force has drastically declined over time. (2) In order to better understand the economic conditions associated with this overall pattern, the second part draws on individual-level panel data to study actual employment transitions. The analysis shows that transitions are less frequent than the aggregate pattern might suggest: Only a minority of routine workers actually switches to other jobs while the largest chunk of the decline is explained by ‘natural transitions’ into retirement. (3) The last part of the paper builds on original survey data to examine routine workers’ subjective assessment of their chances in a changing world of work and demonstrates a surprisingly high degree of consciousness about susceptibility to automation. To conclude, I discuss some societal implications of the ‘hollowing of the middle’.
Highlights
The political economies of the developed world are today on the cusp of a profound transformation of labor markets
The analysis shows that transitions are less frequent than the aggregate pattern might suggest: Only a minority of routine workers switches to other jobs while the largest chunk of the decline is explained by ‘natural transitions’ into retirement
The density distributions clearly differ between groups: the large majority of high-skilled nonroutine cognitive workers can be found in estimates of lower than 10% replacement probability, while the estimates of non-routine manual workers and, especially, routine workers are less concentrated in the low-risk region
Summary
The political economies of the developed world are today on the cusp of a profound transformation of labor markets. While the strong increase in high skill and high pay jobs is certainly good news for the development of the Swiss employment structure, the persistent decrease of routine jobs is a source of concern It confronts a shrinking but still sizable and relevant share of the labor force with increasingly bleak prospects in the labor markets of tomorrow. Regarding transitions between task groups, the plot shows that about every tenth routine worker manages to upgrade into the growing sector of high-skilled non-routine cognitive work Even though these jobs often require tertiary degrees, they are apparently not entirely unreachable for routine workers who often lack this educational background.
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