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The singular focus of public debate on the \"top 1 percent\" of households overlooks the component of earnings inequality that is arguably most consequential for the \"other 99 percent\" of citizens: the dramatic growth in the wage premium associated with higher education and cognitive ability. This Review documents the central role of both the supply and demand for skills in shaping inequality, discusses why skill demands have persistently risen in industrialized countries, and considers the economic value of inequality alongside its potential social costs. I conclude by highlighting the constructive role for public policy in fostering skills formation and preserving economic mobility.

We offer a unified analysis of the growth of low-skill service occupations between 1980 and 2005 and the concurrent polarization of US employment and wages. We hypothesize that polarization stems from the interaction between consumer preferences, which favor variety over specialization, and the falling cost of automating routine, codifiable job tasks. Applying a spatial equilibrium model, we corroborate four implications of this hypothesis. Local labor markets that specialized in routine tasL · differentially adopted information technology, reallocated low-skill labor into service occupations (employment polarization), experienced earnings growth at the tails of the distribution (wage polarization), and received inflows of skilled labor.

We analyze the effect of rising Chinese import competition between 1990 and 2007 on US local labor markets, exploiting cross-market variation in import exposure stemming from initial differences in industry specialization and instrumenting for US imports using changes in Chinese imports by other high-income countries. Rising imports cause higher unemployment, lower labor force participation, and reduced wages in local labor markets that house importcompeting manufacturing industries. In our main specification, import competition explains one-quarter of the contemporaneous aggregate decline in US manufacturing employment. Transfer benefits payments for unemployment, disability, retirement, and healthcare also rise sharply in more trade-exposed labor markets.

We analyze the effect of exposure to international trade on earnings and employment of U.S. workers from 1992 through 2007 by exploiting industry shocks to import competition stemming from China’s spectacular rise as a manufacturing exporter paired with longitudinal data on individual earnings by employer spanning close to two decades. Individuals who in 1991 worked in manufacturing industries that experienced high subsequent import growth garner lower cumulative earnings, face elevated risk of obtaining public disability benefits, and spend less time working for their initial employers, less time in their initial two-digit manufacturing industries, and more time working elsewhere in manufacturing and outside of manufacturing. Earnings losses are larger for individuals with low initial wages, low initial tenure, and low attachment to the labor force. Low-wage workers churn primarily among manufacturing sectors, where they are repeatedly exposed to subsequent trade shocks. High-wage workers are better able to move across employers with minimal earnings losses and are more likely to move out of manufacturing conditional on separation. These findings reveal that import shocks impose substantial labor adjustment costs that are highly unevenly distributed across workers according to their skill levels and conditions of employment in the pre-shock period.

China's emergence as a great economic power has induced an epochal shift in patterns of world trade. Simultaneously, it has challenged much of the received empirical wisdom about how labor markets adjust to trade shocks. Alongside the heralded consumer benefits of expanded trade are substantial adjustment costs and distributional consequences. These impacts are most visible in the local labor markets in which the industries exposed to foreign competition are concentrated. Adjustment in local labor markets is remarkably slow, with wages and labor-force participation rates remaining depressed and unemployment rates remaining elevated for at least a full decade after the China trade shock commences. Exposed workers experience greater job churning and reduced lifetime income. At the national level, employment has fallen in the US industries more exposed to import competition, as expected, but offsetting employment gains in other industries have yet to materialize. Better understanding when and where trade is costly, and how and why it may be beneficial, is a key item on the research agenda for trade and labor economists.

\"In einer wachsenden Literatur wird die Auffassung vertreten, dass Veränderungen in der Zuweisung von Arbeitsplatzaufgaben (tasks) zwischen Kapital und Arbeit und zwischen in- und ausländischen Arbeitskräften die Struktur der Arbeitskräftenachfrage in den Industrieländern verändert und eine Polarisierung von Beschäftigung gefördert hat - d.h. steigende Beschäftigungszahlen in den best- und schlechtestbezahlten Berufen. Eine Analyse dieses Phänomens im Rahmen der gängigen Produktionsfunktion ist jedoch schwierig, da die Zuweisung von Aufgaben zu Arbeit und Kapital in diesem Modell im Wesentlichen statisch ist. Dieses Essay skizziert ein Alternativmodell zur Zuweisung von Kompetenzen zu Aufgaben basierend auf dem komparativem Vorteil, bespricht wichtige konzeptionelle und praktische Schwierigkeiten, vor denen Forscher stehen, wenn sie den 'TASKS-Ansatz' in Daten übertragen wollen und warnt vor zwei gängigen Fallstricken, die die immer stärker wachsende Literatur zu diesem Thema durchziehen. Ich schließe mit einer vorsichtig optimistischen Vorhersage für die Möglichkeiten des TASKS-Ansatzes zur Erläuterung der Interaktionen zwischen Angebot an Kompetenzen, technologischem Potenzial und Handels- und Offshoringmöglichkeiten in der Gestaltung der aggregierten Nachfrage nach Kompetenzen, der Zuweisung von Kompetenzen zu Aufgaben und der Entwicklung von Löhnen.\" Forschungsmethode: Theoriebildung; Grundlagenforschung. (Autorenreferat, IAB-Doku). \"An emerging literature argues that changes in the allocation of workplace 'tasks' between capital and labor, and between domestic and foreign workers, has altered the structure of labor demand in industrialized countries and fostered employment polarization - that is, rising employment in the highest and lowest paid occupations. Analyzing this phenomenon within the canonical production function framework is challenging, however, because the assignment of tasks to labor and capital in the canonical model is essentially static. This essay sketches an alternative model of the assignment of skills to tasks based upon comparative advantage, reviews key conceptual and practical challenges that researchers face in bringing the 'task approach' to the data, and cautions against two common pitfalls that pervade the growing task literature. I conclude with a cautiously optimistic forecast for the potential of the task approach to illuminate the interactions among skill supplies, technological capabilities, and trade and offshoring opportunities, in shaping the aggregate demand for skills, the assignment of skills to tasks, and the evolution of wages.\" (Author's abstract, IAB-Doku). Forschungsmethode: Theoriebildung; Grundlagenforschung.

In this essay, I begin by identifying the reasons that automation has not wiped out a majority of jobs over the decades and centuries. Automation does indeed substitute for labor—as it is typically intended to do. However, automation also complements labor, raises output in ways that leads to higher demand for labor, and interacts with adjustments in labor supply. Journalists and even expert commentators tend to overstate the extent of machine substitution for human labor and ignore the strong complementarities between automation and labor that increase productivity, raise earnings, and augment demand for labor. Changes in technology do alter the types of jobs available and what those jobs pay. In the last few decades, one noticeable change has been a “polarization” of the labor market, in which wage gains went disproportionately to those at the top and at the bottom of the income and skill distribution, not to those in the middle; however, I also argue, this polarization and is unlikely to continue very far into future. The final section of this paper reflects on how recent and future advances in artificial intelligence and robotics should shape our thinking about the likely trajectory of occupational change and employment growth. I argue that the interplay between machine and human comparative advantage allows computers to substitute for workers in performing routine, codifiable tasks while amplifying the comparative advantage of workers in supplying problem-solving skills, adaptability, and creativity.

Over the past 3 decades, the U.S. Temporary Help Services (THS) industry grew five times more rapidly than overall employment. Contemporaneously, courts in 46 states adopted exceptions to the common law doctrine of employment at will that limited employers’ discretion to terminate workers and opened them to litigation. This article assesses the contribution of “unjust dismissal” doctrine to THS employment specifically, and outsourcing more generally, finding that it is substantial—explaining 20% of the growth of THS between 1973 and 1995 and contributing 500,000 additional outsourced workers in 2000. States with smaller declines in unionization also saw substantially more THS growth.

We exploit the military mobilization for World War II to investigate the effects of female labor supply on the wage structure. The mobilization drew many women into the workforce permanently. But the impact was not uniform across states. In states with greater mobilization of men, women worked more after the war and in 1950, though not in 1940. These induced shifts in female labor supply lowered female and male wages and increased earnings inequality between high school– and college‐educated men. It appears that at midcentury, women were closer substitutes for high school men than for those with lower skills.