Labor Market Polarization and the Great Di vergence: Theory and Evidence
A bstract:
Two of the most important feat ures of advanced labor markets in the past quarter century are labor market polarization and the great divergence. The first of these concerns the gro wth of jobs in high and low wage categories and the disappearance of middle wage jobs. The second is an explicitly spatial theory about the intensific ation of development particularly at the high end in large, already develop ed cities relative to smaller, less developed cities. This paper addresses how the two phenomena are interrelated. The great divergence is typically c ontemplated in a two factor setting with skill-biased technical change. Lab or market polarization is instead considered in an explicitly three-factor setting, specifically rejecting the simpler framework. We develop a theory in which the driving forces of labor market polarization alone give rise to both phenomena, building on Autor and Dorn (2013), Davis and Dingel (2014) and Davis and Dingel (forthcoming). Key to this is that the productivity a dvantages in large cities are biased toward high skilled tasks, so that a u niform shock to technology leads to labor market polarization with a biased impact on cities of different sizes, giving rise to the great divergence. We examine the model using detailed data for a sample of 117 French cities and find the patterns in the period 1994-2015 accord well with the theory.< /span>
DTSTAMP:20260405T192553Z DTSTART:20190325T163000Z DTEND:20190325T180000Z SEQUENCE:0 TRANSP:OPAQUE END:VEVENT END:VCALENDAR