Upgrading or Polarization? Occupational Change in Britain, Germany, Spain and Switzerland

Abstract

We analyze occupational change over the last two decades in Britain, Germany, Spain and Switzerland: which jobs have been expanding – high-paid jobs, low-paid jobs or both? Based on individual-level data, four hypotheses are examined: skillbiased technical change, routinization, skill supply evolution and wage-setting institutions. Our analysis reveals massive occupational upgrading which closely matches educational expansion: employment expanded most at the occupational hierarchy's top, among managers and professionals. In parallel, intermediary occupations (clerks and production workers) declined relative to those at the bottom (interpersonal service workers). This U-shaped pattern of upgrading is consistent with the routinization hypothesis: technology seems a better substitute for average-paid clerical and manufacturing jobs than for low-end interpersonal service jobs. Yet country differences in low-paid services suggest that wage-setting institutions channel technological change into more or less polarized patterns of upgrading. Moreover, recent surges in immigration in Britain and Spain seem decisive in having provided the low-skilled labour supply necessary to fill low-paid jobs.