from the Atlanta Fed
— the post co-authored by the Federal Reserve Banks of Atlanta, Cleveland and Philadelphia
Much has been written about the long-run decline in middle-skill and middle-wage jobs. The general consensus in the literature is that the U.S. economy has become “polarized” as a result of a decline in middle-wage jobs and a concurrent increase in jobs situated at the poles of the earnings spectrum. This process of polarization has been said to have produced a “hollowed out” or barbell-shaped economy, again evoking the notion of jobs clustered at the ends of the economy with little opportunity in the middle.
Technological change and the automation of routine tasks at the heart of some middle-wage jobs are often cited as underlying causes of economic polarization (Autor, Levy, and Murnane 2003; Autor, Katz, and Kearney 2006). The globalization of trade and the decline of unions and associated collective bargaining rights are also commonly mentioned in the literature. These forces have not only influenced economic opportunity by favoring or disadvantaging particular industries, but they have also led to occupational shifts within industries that have contributed to the process of polarization (Tüzemen and Willis 2013).
Although much of the research on economic INTRODUCTION polarization investigates the process over the long term, recent research explores the impact of recessionary periods and recoveries on this phenomenon. While there is some disagreement, work by Jaimovich and Siu (2012) suggests that recessionary periods, including the Great Recession, might accelerate the loss of middle-skill jobs. Whether recessions quicken the pace of polarization over the long term or not, there is ample evidence that job growth during the recent recovery has been concentrated in higher- and lower-wage sectors.
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