Economic and Social Research Council
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Don't blame the robots

Education, rather than technology, is a main factor in the decline of mid-skilled jobs.

Several developed countries have seen their labour markets becoming polarized in recent decades as the numbers of middle-skilled jobs have declined relative to those of low- and high-skilled jobs. Technology has been singled out as the main culprit: automation has reduced the demand for workers with mid-level skills in production lines and offices, while increasing demand for high-skilled managers, professionals and technicians. Meanwhile, there has been little impact on the demand for low-skilled service occupations.

As advances in technology lead firms to require fewer workers in mid-skill occupations, these jobs should see both employment and wages decline relative to low- and high-skill jobs. This ‘double polarisation’ was indeed what happened in the US in the 1990s, but it did not continue into the 2000s. And wage polarisation has generally not been detected in other countries that have experienced job polarisation, suggesting that factors other than technology may have played an important role.

A study by Dr Andrea Salvatori of the Institute for Social and Economic Research finds that the steady decline in middling occupations in Britain over the last three decades has resulted in a substantial shift of employment: out of 100 employees, 19 fewer could be found in middle-skill occupations. Of these, 16 had moved to higher-skill occupations and only three into lower-skill ones.

A distinctive change in Britain since the early 1990s is the expansion in university education, which has led to a tripling in the share of graduates among employees, accounting for the entire growth in top-skilled occupations, as well as a third of the decline in middling occupations.

In parallel, the relative performance of wages in high-skill occupations has deteriorated relative to mid-skill ones, indicating that the supply of workers for these jobs outpaced demand and contributed to the continuing shift from the middle to the top. These facts are highly suggestive that the improvement in the education of the workforce has contributed significantly to the reallocation of employment from mid- to high-skill occupations.

Technology could even be complementary to mid-skilled workers. Since the 1990s, the share of clerical jobs in Britain has indeed declined, but over the same period the wages of clerical workers have grown at a rate similar to those of professional occupations. This could be, for example, because technology enables administrative staff to take on responsibilities that were once the domain of managerial staff.

Across countries, there is generally little evidence to support the idea that automation has been dramatically disrupting the labour market in recent times. Instead, there are clear indications that changes in the composition of the workforce are likely to have played a significant role in the shift from mid- to high-skilled jobs in the last three decades.

Further information

This article was originally published in our Britain in 2016 magazine.

Channel website: http://www.esrc.ac.uk

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