Some fear a greater polarization of the labor market after the Corona pandemic. Office jobs could increasingly disappear and new jobs could emerge, especially for high- and low-skilled people. This could lead to a development that has not yet been observed to any great extent in some countries, but has been observed for some time in Anglo-Saxon countries such as the USA. But does it really have to come to this?
In recent years, a debate has arisen about whether labor markets in advanced economies are becoming increasingly polarized – i.e., jobs are being created that require either a high or a low level of education, while the number of jobs for people with an intermediate level of education – mostly classic office jobs – tends to decline. Against the backdrop of the corona pandemic, these fears have become even stronger. Various studies point to an increase in job polarization in several advanced economies, particularly the United States (1). However, polarization does not occur to the same extent in all advanced, emerging, or developing countries (2).
Labor market polarization is often explained using the “routine-based technological change (RBTC)” hypothesis (3). The RBTC hypothesis states that recent technological changes, discussed under keywords such as digitalization, are taking over routine office jobs that previously required an intermediate level of education. In contrast, a number of tasks that require either a high or low level of education do not follow a clear, structured, protocolized procedure and are therefore difficult to automate. They often require qualities such as creativity, flexibility, judgment, personal interactions, or manual tasks that cannot be automated.
Globalization could further increase labor market polarization, for example because global value chains have become more important and many services have become more tradable through modern means of communication (4). This facilitates the offshoring of office jobs. It is possible that the shift toward more home-based work could, over time, facilitate offshoring from advanced economies, and people in emerging and developing economies could benefit at the expense of people in advanced economies.
Is this what will happen? Although much research is being done on this, we have to admit: we don’t know. Many researchers believe that the pandemic could reinforce the trends toward automation and outsourcing of service jobs that were already evident before Corona. But at the same time, the desire for face-to-face contact may become stronger, which could slow down the outsourcing of service jobs or automation in some areas, for example. It is also quite possible that many new jobs will be created, which require personal contacts. And anyway: automation does not fall from the sky. It is shaped by political conditions, decisions of companies and needs of people. Even if proposals such as robot taxes are probably not a good idea – technological change should not be slowed down – it would be worth considering whether taxes and duties on labor could be reduced in order to avoid artificially promoting automation through tax discrimination against labor.
- See Autor, David and David Dorn, “The Growth of Low-Skill Service Jobs The Growth of Low-Skill Service Jobs and the Polarization of the US Labor Market,” American Economic Review, 2013, 103 (5), 1553 – 1597; or Goos, Maarten, Alan Manning, and Anna Salomons, “Explaining Job Polarization: Routine-Biased Technological Change and Offshoring,” The American Economic Review, 2014, 104 (8), 2509–2526.
- Vgl. etwa Murphy, Emily and Daniel Oesch, “Is Employment Polarization Inevitable? Occupational Change in Ireland and Switzerland, 1970-2010,” Employment and Society, 2016, 32 (6), 1099–1117; or Murphy, Emily C and Daniel Oesch, “Is Employment Polarisation Inevitable? Occupational Change in Ireland and Switzerland, 1970–2010,” Work, Employment and Society, 2018, 32 (6), 1099–1117.
- Vgl. etwa Autor, David and David Dorn, “The Growth of Low-Skill Service Jobs The Growth of Low-Skill Service Jobs and the Polarization of the US Labor Market,” American Economic Review, 2013, 103 (5), 1553 – 1597; or Goos, Maarten, Alan Manning, and Anna Salomons, “Explaining Job Polarization: Routine-Biased Technological Change and Offshoring,” The American Economic Review, 2014, 104 (8), 2509–2526.
- Blinder, Alan, “How Many US Jobs Might be Offshorable?,” World Economics, 2009, 10 (2), 41–78; Baldwin, Richard, “The Globotics Upheaval: Globalisation, Robotics and the Future of Work”, W&N 2019.
Some of my blog posts and economic forecasts are first reserved to my paying subscribers. After two weeks, all articles are publicly available. If you would like to get instantaneous access, you can subscribe for 5 US dollars per month (or the equivalent amount in your currency). You can unsubscribe at any time:
Or contact me at: email@example.com