The Growth of Low-Skill Service Jobs and the Polarization of the US Labor Market

The authors offer a unified analysis of the growth of low-skill service occupations between 1980 and 2005 and the simultaneous polarization of US employment and wages. They hypothesize that polarization stems from the interaction between consumer preferences, which favor variety over specialization, and the falling cost of automating routine, codifiable job tasks. They find that local labor markets that specialized in routine tasks differentially adopted information technology, reallocated low-skill labor into service occupations (employment polarization), experienced earnings growth at the tails of the distribution (wage polarization), and received inflows of skilled labor.