Upgrading or polarization? Occupational change in Britain, Germany, Spain and Switzerland, 1990-2008

Abstract

This paper analyzes the pattern of occupational change in four Western European countries over the last two decades: what kind of jobs have been expanding -- high-paid jobs, low-paid jobs or both? By addressing this issue, we also examine what theoretical account is consistent with the observed pattern of change: skill-biased technical change, skill supply evolution or wage-setting institutions? Our empirical findings show a picture of massive occupational upgrading that closely matches educational expansion. In all four countries, by far the strongest employment growth occurred at the top of the occupational hierarchy, among managers and professionals. Yet in parallel, in Britain and Switzerland, as well as in Germany and Spain after 1996 and 2002 respectively, relative employment declined more strongly in the middling occupations (among clerks and production workers) than at the bottom (among interpersonal service workers). This slightly polarized pattern of occupational upgrading is consistent with the routinization hypothesis that technology is a better substitute for average-paid jobs in production and the office that for low-paid jobs in interpersonal services. However, we find large cross-country differences in the employment evolution at the bottom of the occupational hierarchy, among low-paid services workers: sizeable growth in Britain and Spain, but stagnation in Germany and Switzerland. This results points towards the possibility that wage-setting institutions filter the pattern of occupational change.