Across the developed world, employment has polarized clearly by occupation, but changes to the wage structure have been harder to interpret. We examine changes to the wage structure in the UK and Germany, two countries with apparently very different trends. Using panel data, we argue that changes to quality-adjusted prices for occupations grouped by predominant tasks correlate strongly with employment growth in both countries, consistently with task-based changes to labour demand. The gap between price and average wage changes is strongest in top (knowledge) jobs, implying that the average quality of these workers has declined over time. We obtain further direct evidence on changes to worker quality using rich data on individual characteristics.

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1 October 2020

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Labour Economics 662020

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DOI: 10.1016/j.labeco.2020.101884

https://www.sciencedirect.com/science/article/pii/S0927537120300889

This Journal article is published under the centre's Education programme, Labour programme.