Where Have the Middle-Wage Workers Gone? A Study of Polarization Using Panel Data

2015/10/28 by Guido Matias Cortes, Guido Matías Cortés · 3 citations
Economics, Econometrics and Finance · #Firm Innovation and Growth #Global trade and economics #Labor market dynamics and wage inequality

paper · doi:10.1086/682289

openalex publication_date 2015/10/28 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/29

Abstract

This paper presents a theoretical and empirical analysis of the effects of routine-biased technical change on occupational transition patterns and wage changes of individual workers using a general equilibrium model with endogenous sorting of workers into occupations. Consistent with the predictions of the model, data from the Panel Study of Income Dynamics show strong evidence of selection on ability in the occupational mobility patterns of routine workers, a significant fall in the wage premium in routine occupations, and faster wage growth over long-run horizons for workers switching out of routine jobs relative to those who stay.

Citations

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