Hollowing out and labour markets – the myth

New article on Vox: The ‘hollowing out’ thesis suggests that there are far fewer intermediate-level jobs in the labour market and far more low- and high-level jobs than two or three decades ago, primarily due to technological advancement. However, a new article by Bob Butcher just posted on Vox, challenges the conclusion of this thesis. Though the composition of intermediate-level jobs has changed, their volume has probably not. Policy implications for specific groups of job seekers are discussed. The article draws out implications from a recent publication by Steve McIntosh, following a NIESR policy seminar in September, and shows there is little or no evidence that the labour market has been 'hollowed out. If relative wages are assumed to stay constant and if the development of new occupations is ignored, then a reduction in mid-level jobs can be observed. However, once account is taken of changing relative wages and of new jobs created over time there is less if any reduction in the volume of mid-level jobs. The article also uses new analysis to show how the artificial appearance of hollowing out can arise from a quite different change in the volume and distribution of jobs. In particular, the new analysis shows that an increase in the volume of high-pay jobs (as has happened in recent decades) leads to an increase in the proportion of low-pay jobs (those below two thirds median pay), and a decrease in the proportion of mid-pay jobs, even if there is no change in the volume of low- and mid-pay jobs. Short url for Vox article: http://goo.gl/OSsmzk