We show that the observed polarization of employment toward the high- and low-skill occupations disappears when only native workers are considered. Instead, low-skilled immigration explains employment growth at the low tail of the skill distribution. Moreover, while employment rose, wages remained subdued in low-skill occupations. A data-disciplined structural model accounts for this evidence: Offshoring and automation negatively affect middle-skill occupations but enhance employment and wages for the high-skilled. Low-skill employment is sheltered from offshoring and automation, as it consists of manual, non-tradable services. However, low-skilled immigration depresses low-skill wages and encourages native workers to move into skilled occupations through training.
Mandelman, Federico S., and Andrei Zlate.
"Offshoring, Automation, Low-Skilled Immigration, and Labor Market Polarization."
American Economic Journal: Macroeconomics,
Trade and Labor Market Interactions
Human Capital; Skills; Occupational Choice; Labor Productivity
Wage Level and Structure; Wage Differentials
Geographic Labor Mobility; Immigrant Workers
Personnel Economics: Training