Offshoring, Automation, Low-Skilled Immigration, and Labor Market Polarization
- (pp. 355-89)
Abstract
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.Citation
Mandelman, Federico S., and Andrei Zlate. 2022. "Offshoring, Automation, Low-Skilled Immigration, and Labor Market Polarization." American Economic Journal: Macroeconomics, 14 (1): 355-89. DOI: 10.1257/mac.20180205Additional Materials
JEL Classification
- F16 Trade and Labor Market Interactions
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 Wage Level and Structure; Wage Differentials
- J61 Geographic Labor Mobility; Immigrant Workers
- M53 Personnel Economics: Training
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