Wage and job polarization are two defining phenomena that have characterized the US labor market from the 1980s to the late 2000s. Polarization has also differed distinctly between demographic subgroups, such as men and women. In addition, sorting patterns between workers and firms have changed over this period. This paper finds that technological change can account for a substantial part of these phenomena. It does so by constructing a structural model with two key ingredients: 1) directed search and 2) two-sided multidimensional heterogeneity. Estimation results show that the complementarity between cognitive skills and tasks increased relative to that between both interpersonal and manual skills and tasks. Complementarity between manual skills and tasks decreased substantially. This change in production technology induces polarization in the model and also generates improvement in sorting between workers and firms in the cognitive dimension relative to other dimensions, in line with the data. The model also accounts for a large part of the gender differences in polarization. Lastly, in this novel framework of directed search with multidimensional heterogeneity, I develop a definition of assortative matching and examine the conditions under which it is obtained.
Human Resources officers report skill and occupational shortage to be the main cause of unfilled vacancies. Yet, it is not clear whether these are just complaints or lead to effective adjustments of wages and employment throughout time. This paper gives evidence that local labor markets reporting higher skill and occupational shortage adjust prices and quantity upwards only in few occupations. By crossing data from the UK Employer Skill Survey with the UK Labor Force Survey, we show that English regional markets that experienced higher shortage adjusted wages and quantity only in professional occupations. Moreover, there is evidence that these regions attracted more professional and high-skilled workers from others. This fact sheds light on the inequality behind internal migration, and on the fact that only high-skilled people can afford and find profitable to move. We reconcile this evidence with a theoretical model with multiple jobs and locations (islands) to see the dynamic conditions that grant a long run equilibrium under which no arbitrage is possible and inequality can be attenuated.
Within-firm factors are known to play a major role in wage inequality. This paper documents the role of hierarchies in gender wage and employment gaps using administrative French data. First, we document the extent and evolution of gender wage gaps across pre-defined layers of hierarchy within firms over time. We find that gender wage and representation gaps are larger in upper layers of hierarchy, even as they narrow over time. Second, we exploit a policy on corporate board quotas in France to study the impact of an increase in female leadership on gender wage and employment outcomes within firms. We find that a rise in the share of women on corporate boards narrows the gender wage gap only for top layers of hierarchy, but not for lower layers. We also observe that greater female corporate board membership increases the share of women working part-time in lower layers of hierarchy, at the expense of full-time work. The opposite effect holds for upper layers. The results suggest that, at least in the short term, female corporate board members improve the relative wages of women in close hierarchical proximity. They may also be able to affect change on flexi-work culture for the firm as a whole. However, due to the nonlinear returns to hours worked for upper layer professions, only lower layer women shift into part-time work.