Job polarisation and job quality

Evidence shows that labour markets across Europe and the US have become increasingly polarized as the growth of bad (low-pay, low-skills) and good (high-pay, high-skills) jobs has exceeded that of mid-ranking jobs in recent years. This poses a number of policy challenges. For instance, the growing number of low-paid workers may increase the cost of welfare-to-work programmes and the relative decline in middle-pay jobs can hinder the chances for the low-paid to move into better-paid jobs, limiting social mobility. Understanding the causes of job polarization, its features and its implications is crucial to design effective policies to tackle these challenges. This research programme comprises five projects making important contributions in each of these respects.
The first project will lay the foundations for the subsequent work by conducting a survey of the interdisciplinary literature on job quality. Contributions from psychology, economics and sociology will be reviewed to identify the main conceptual frameworks within which different scholars have assessed what makes a good job.
The second project will provide new and unique evidence on job polarization using micro-data on British firms. The currently prevailing explanation for polarization argues that the ability of machines to perform routine tasks generally associated with middle-skill jobs has led to a fall in the demand by firms for mid-skilled workers. Yet, we have no evidence of this at the firm level. The research will investigate directly the role of demand-side factors in driving polarization and to document changes in the organization of work within and across firms which affect workers' chances of career progression. In addition, by exploiting information on workers matched to their employers, this study will also provide the first evidence of the links between polarization and other aspects of job quality that have direct impacts on people's wellbeing, such as job satisfaction and work intensity.
The link between job polarisation and other dimensions of job quality is the focus of a third project which uses a range of datasets on individuals and firms covering all EU countries over the past decade. We consider the implications of the explanations of job polarisation proposed in the literature for different aspects of job quality such as job satisfaction, autonomy and work intensity. For example, it is possible that the ability of machines to perform routine tasks frees workers from the most tedious aspects of their work. Alternatively, technology could be making work more intense, by increasing the number of tasks that can be done at a time or by reducing the frequency and duration of the gaps between active work. The analysis will pay close attention to the extent to which changes in job quality vary across different occupations providing a previously unavailable picture of worker wellbeing in a polarised labour market.
The fourth project will look at the implications of polarisation for fiscal policy. By using microsimulation methods, the research will assess the impact of expected polarisation-driven changes in labour markets on government budget and ability to redistribute through tax and benefits systems. The analysis will cover a number of EU countries and will be the first to highlight the challenges for fiscal policy arising from these structural labour market changes.
The final project investigates whether polarisation has affected the ability of low-paid workers to progress up the wage and occupational distribution in the UK. The analysis uses data on individuals from the past twenty years and provides a first empirical examination of whether the loss of middle-pay jobs increases the chances of "low-pay traps".

The proposed research will advance our understanding of causes, features and implications of "job polarisation", i.e. the growth of low- and high-pay jobs accompanied by the loss of mid-pay jobs. The hollowing out of the labour market has already attracted attention well beyond the walls of academia. The expression the "shrinking middle" has entered the mainstream political discourse in many countries, and the topic has been discussed in the media, including the The Economist (2010), the BBC (Hewitt 2012),The Wall Street Journal (Paletta 2012), CNN (Osterman 2011b), the New York Times (D'Andrea Tyson 2012), the Guardian (Paul Harris 2011) and The Telegraph (Truss 2011). Job quality is one of the targets of the EU employment strategy (European Council 2000), and its policy relevance will increase further as more countries will follow the lead of France and the UK (CMEPSP 2009, ONS 2011) in placing more emphasis on measures of wellbeing broader than GDP alone (OECD 2011).

The research findings will provide important insights for policies on poverty, social mobility, skills and employment which will be of interest for at least two UK government departments, the Department of Work and Pensions (DWP) and the Department for Business, Innovation and Skills (DBIS). The relevance of this area of research for the two departments is testified by the fact that polarisation and its implications are already mentioned in some of their background research papers (DWP 2008, DBIS 2010, Crawford eta l. 2011).

The most relevant aspects for the DWP will be (i) the study of the impact of polarisation on the cost of in-work benefits, and (ii) the implications of changes in the structure and organisation of firms for employment stability and career progression.

The DBIS will certainly find my research on the effect of polarisation on occupational and wage mobility useful as well as the results on the role played by firms in determining the overall quality of jobs.

The research will also be of interest to UK non-departmental public bodies such as the Commission for Employment and Skills, which promotes practices to create "more and better jobs", and the Low Pay Commission, which focuses on the conditions of those at the very bottom of the wage distribution.

In addition, the research will be of interest to a number of non-governmental organisations which aim at influencing policies on skills, poverty, social mobility and quality of life. These include workers' organisations such as the Trades Union Congress, and foundations such as the New Economics Foundation, The Nuffield Foundation, The Work Foundation and The Joseph Rowntree Foundation.

The focus of the research will not be limited to the UK. New and unique evidence will be produced on the quality of jobs in Europe and on the expected impact of polarisation on fiscal policies across a number of European countries.

This part of the research will certainly be of interest for the European Foundation for the Improvement of Living and Working Conditions (EUROFOUND), a European Union body which contributes to the planning and design of better living and working conditions in Europe.

Finally, given the emphasis on quality of jobs within the "Agenda for new skills and jobs" of the EU "Europe 2020" strategy for "smart, sustainable and inclusive growth" (EU 2012), the proposed research will also be of interest to the European Commission and in particular to the Directorate-General for Employment, Social Affairs and Inclusion.