Job Polarization

Definition

Job polarization refers to the phenomenon where employment opportunities become concentrated at the high and low ends of the skill and wage spectrum, with a relative decline in middle-skill, middle-wage jobs. This trend is driven by technological advancements and globalization that automate or offshore routine, middle-skill tasks, while increasing demand for highly-skilled, high-wage workers as well as low-skill, low-wage service jobs.

5 Must Know Facts For Your Next Test

1. Job polarization has led to a 'hollowing out' of the middle-skill job market, with a relative decline in occupations such as clerical, production, and administrative roles.
2. Highly-skilled, high-wage occupations, such as those in the fields of technology, finance, and professional services, have seen increased demand and growth.
3. Low-skill, low-wage service jobs, such as food service, retail, and personal care, have also experienced growth, as they are less susceptible to automation and offshoring.
4. Job polarization has contributed to rising income inequality, as the gains from technological progress and globalization have accrued primarily to high-skilled workers.
5. Policies aimed at addressing job polarization often focus on improving access to education and training, as well as supporting the transition of displaced workers into new, in-demand occupations.

Review Questions

• Explain how technological advancements and globalization have contributed to job polarization.
  • Technological advancements, such as automation and artificial intelligence, have led to the displacement of routine, middle-skill jobs that can be easily automated. This, combined with the offshoring of these types of tasks to lower-cost regions, has resulted in a relative decline in middle-skill employment opportunities. At the same time, technological change has increased the demand for highly-skilled workers who can leverage these new technologies, as well as for low-skill service jobs that are less susceptible to automation and offshoring.
• Describe the impact of job polarization on income inequality.
  • Job polarization has contributed to rising income inequality, as the gains from technological progress and globalization have accrued primarily to high-skilled, high-wage workers. The relative decline in middle-skill, middle-wage jobs has led to a hollowing out of the middle class, while the growth in both high-skill, high-wage occupations and low-skill, low-wage service jobs has widened the income gap between these two groups. This trend has implications for social mobility and the overall distribution of economic resources within society.
• Evaluate potential policy solutions to address the challenges posed by job polarization.
  • Addressing the challenges of job polarization will likely require a multifaceted approach. Policies aimed at improving access to education and job training, particularly in fields that complement new technologies, can help workers develop the skills necessary to transition into high-wage, in-demand occupations. Supporting the retraining and job placement of displaced workers, as well as investing in infrastructure and economic development in affected communities, can also help mitigate the negative impacts of job polarization. Additionally, policies that promote inclusive growth, such as strengthening social safety nets and ensuring fair wages, can help address rising income inequality and provide a more equitable distribution of the gains from technological progress and globalization.

Related terms

Technological Displacement: The process by which technological innovations replace human labor, particularly in routine, middle-skill occupations.

Skill-Biased Technological Change:

The shift in labor demand towards more highly-skilled workers due to the introduction of new technologies that complement skilled labor and substitute for unskilled labor.

Offshoring:

The practice of relocating business processes or services to another country, often to take advantage of lower labor costs or other competitive advantages.