The Polarization Myth: Occupational Upgrading in Germany,Spain,Sweden,and the UK,1992–2015

Abstract

The consensus view in economics is that labor markets are polarizing as job creation takes place in high-skilled and low-skilled occupations, while jobs shrink in midskilled ones. The authors argue that, in theoretical terms, polarization runs counter to all the trends that shaped the job structure over the past decades: skill-biased technological change, the international division of labor, and educational expansion. The authors then show that the polarization thesis does not hold empirically. They use the European Labor Force Survey to analyze occupational change for Germany, Spain, Sweden, and the United Kingdom from 1992 to 2015 and define good and bad occupations with four alternative indicators of job quality: earnings, education, prestige, and job satisfaction. Job growth was by far strongest in occupations with high job quality and weakest in occupations with low job quality, regardless of the indicator used. The authors find clear-cut occupational upgrading for Germany, Spain, and Sweden. In the United Kingdom, the data support the polarization thesis when job quality is measured with earnings. If job quality is defined with education, prestige, or job satisfaction, the results show occupational upgrading. In all four countries, production workers and office clerks lost ground, whereas employment strongly expanded in the salaried (upper) middle class among managers and professionals.