The polarisation of labour markets in OECD countries

Labour market polarisation typically refers to the growth in wage dispersion and in the dispersion of employment and unemployment rates between low- and high-skill or low- and high-education workers. According to the widely supported so-called transatlantic consensus, globalisation and technological development have increased the relative excess demand for high-skill workers, which has led to growth in wage dispersion in the United States and other countries with flexible labour markets, while in many European countries labour market institutions have prevented the growth of wage differentials, with the consequences manifesting instead in greater dispersion of employment and unemployment rates.

This review demonstrates that the transatlantic consensus has not held in recent times, particularly with regard to the polarisation of employment trends, although some development in line with it has been observable in terms of wage dispersion. With regard to international trade, the foreign outsourcing of manufacturing in particular has been seen as causing polarisation, but technological development appears to have been a more important factor, albeit one that must be understood more broadly than merely as the spread of information and communications technology. Labour market institutions have had a wage-compressing and polarisation-reducing effect in many European countries. In assessing which institutions would be favourable in this respect, attention must be paid to their interactions and combinations. (AI translation)

• ISSN: 1795-2832
• ISBN: 978-952-209-004-2
• Press Release in Finnish