Percorrer por autor "Schmid, Moritz Josef"
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- Wage dispersion, technology adoption and labor market polarizationPublication . Schmid, Moritz Josef; Reis, Hugo Jorge Correia de Azambuja de FreitasThe last decades have seen labor markets in developed economies become increasingly polarized. In a recent contribution, Shim and Yang (2018) show that labor market polarization in the U.S. has been more pronounced in high-wage industries that in low-wage industries. This thesis seeks to investigate whether the observed relationship between wage differentials across industries and labor market polarization also holds for a different economy. Using Canadian decennial census data and WORLD KLEMS Growth and Productivity Accounts, our empirical results reveal remarkable similarity to those of Shim and Yang (2018) and confirm that wage differentials and labor market polarization are systematically linked. We introduce a two-sector neoclassical growth model in discrete time to scrutinize the relationship between inter-industry wage differentials and labor market polarization. Assuming a rigid wage structure, the model shows that firms in high-wage industries seek to cut overall production costs by substituting workers performing ’routine’ tasks with information- and communication technologies (ICT). As technological improvements have led to a rapid price decline for ICT, firms in high-wage industries have more economic incentives to dynamically substitute routine workers with ICT. Firms that pay a relatively high wage premium to workers, decrease routine employment more stronger than low-wage firms, which, in turn, has led to heterogeneous degrees of job polarization across industries.