Labour market polarisation and the implications for education

Labour market polarisation involves a decline in the share of intermediate-skilled jobs in the labour market, with a corresponding growth in the share of both low-skill and high-skill jobs. This phenomenon has been observed in a range of countries and time periods. This chapter summarises currently available evidence on the existence of polarisation, and then provides a discussion of why polarisation has occurred. This discussion focusses on technological change, offshoring, international trade and provision of ‘home production’ services as potential explanations, and the evidence for each. Technological change that is ‘task-biased’, in the sense that it is replacing labour in jobs involving routine, repetitive tasks, emerges as a key explanation for polarisation, given that routine tasks are typically found in intermediate-level jobs, for example, administrative and skilled manual work. Given this, the chapter concludes with a discussion of the implications of such polarisation for education. It is argued that despite the declining share of jobs originally classified as intermediate, it is still important for countries to provide, and young people to acquire, intermediate-level qualifications, primarily via vocational and technical education. Although older intermediate-level jobs are disappearing, new ones are emerging, involving tasks complementary to, rather than substituted by, the new technology. Furthermore, education remains one of the primary determinants of progression to higher-level jobs.