Ariell Reshef

While job polarization was a salient feature in European economies in the decade up to 2010, this phenomenon has all but disappeared, except in a handful of Southern-European economies. The decade following 2010 is characterized by occupational upgrading, where low-paid jobs shrink and high paid jobs expand. We show that this is associated with automation: employment shares in low paid, highly automatable jobs shrinks, while employment shares of better paid jobs that are unlikely to be automated expands. Techies (engineers and technicians with strong STEM skills) help explain cross country variation in occupational upgrading: economies that are abundant in techies or exhibit high growth of techies see strong skill upgrading; in contrast, polarization is observed in economies with few techies. Robotization is associated with skill upgrading in manufacturing. We discuss the additional roles of globalization, structural change and labor market institutions in driving these phenomena. Hitherto, artificial intelligence (AI) seems to have similar impacts as other automation technologies. However, there is uncertainty about what new AI technologies harbor.

We study how technology adoption and changes in global value chain (GVC) integration jointly affect labor shares and business function specialization in a sample of 14 manufacturing industries in 14 European countries in 1999–2011. Increases in upstream, forward GVC integration directly reduce labor shares, mostly through reductions in fabrication, but also via other business functions. We do not find any direct effects of robot adoption; robotization affects labor only indirectly, by increasing upstream, forward GVC integration. In this sense robotization is “upstream-biased”. Rapid robotization in China shaped robotization in Europe and, therefore, relative demand for labor there.

We study the evolution of labor shares in 1995-2014, while taking into account international trade based on value added concepts. Declines in labor shares accelerate in 2001-2007, concurrently with global value chain (GVC) participation, after which there is no trend for both. We develop a gravity-based instrument for GVC participation and find that the acceleration in the decline in labor shares is caused by increased intensity of forward GVC participation. The insertion of China into GVCs has a disproportionally large effect through this mechanism. Declines in labor shares are shouldered mostly by less skilled workers in fabrication functions. Relatively capital abundant countries participate more in forward GVCs linkages, which is associated with greater upstreamness within GVCs and increases in capital intensity. Forward GVC participation is associated with international vertical integration of both upstream intermediate input production and of offshoring of downstream assembly.

Using administrative employee-firm-level data on the entire private sector from 1994 to 2007, we show that the labor market in France has polarized: employment shares of high and low wage occupations grew, while middle wage occupations shrank. At the same time, the share of technology-related occupations (“techies”) grew substantially. Aggregate polarization was driven mostly by changes in the composition of firms within industries. Within-firm adjustments and changes in industry composition were much less important. Polarization occured mostly within urban areas, with roughly equal contributions of men and women. We study the role of technology adoption in shaping firm-level outcomes using a new measure of the propensity of a firm to adopt new technology: its employment share of techies. We find that techies were an important force driving aggregate polarization in France, as firms with more techies grew faster.

La France a subi un changement structurel rapide au cours des trois dernières décennies. Elle n’est plus seulement spécialisée dans quelques domaines du secteur manufacturier mais s’est tournée vers celui des services : recherche et développement, activités de commerce ou du secteur financier. Le marché du travail, en accroissant la proportion des emplois à bas et haut salaire au détriment des emplois intermédiaires, s’est fortement polarisé – et la crise de 2008 a exacerbé ce phénomène, probablement lié à l’essor des nouvelles technologies et à l’élargissement de la mondialisation. Vecteur d’inégalités salariales, la polarisation de l’emploi ravive aussi les tensions sociales et les passions politiques. Pour autant, les effets négatifs de ces changements majeurs ne sont pas inévitables. A. Reshef et F. Tubal ouvrent ici des pistes de réflexion originales sur le devenir de l’emploi en France. Et proposent des politiques publiques d’ajustement et de formation qu’il faudrait adopter pour que les gains engendrés par le progrès économique soient mieux répartis.

We study the instability of hyper-specialization of exports at the 4-digit level in 1998–2010. (1) Specializations are surprisingly un-stable. Export ranks are not persistent, and new top products and destinations replace old ones. Measurement error is unlikely to be the main or only determinant of this pattern. (2) Source country factors are not the main explanation of this instability. Only 16–20% of variation in export growth is accounted for by source country plus source country-product factors that do not vary across destinations. The high share of idiosyncratic variance (source-product-destination residual) of 41–55%, indicates the difficulty to predict export success using source country characteristics. While we are cautious in interpreting factors that are jointly determined in global general equilibrium, our results suggest that destination and product-specific factors importantly matter at least as much as source country factors.

Do past employment characteristics of central bank governors affect financial regulation? To answer this question, we construct a new data set based on curriculum vitae of all central bank governors around the world in 1970–2011. We interpret work experiences as indicators of preferences toward deregulation. Over the average duration in office (5.6 years), a governor with financial sector experience is associated with three times more deregulation than a governor without experience in finance. Similar results hold for past experience at the IMF; in contrast, past experience at the BIS and the UN are associated with less deregulation.

We study the allocation and compensation of human capital in the finance industry in a set of developed economies in 1970-2011. Finance relative wages generally increase—but not in all countries, and to varying degrees. Trading-related activities account for 50% of the increases, despite accounting for only 13% of finance employment, on average. Financial deregulation is the most important factor driving up wages in finance; it has a larger effect in environments where informational rents and socially inefficient risk taking are likely to be prevalent. Differential investment in information and communication technology does not have causal explanatory power. High finance wages attract skilled international immigration to finance, raising concerns for “brain drain.

We establish the following stylized facts: (1) Exports are characterized by Big Hits, (2) the Big Hits change from one period to the next, and (3) these changes are not explained by global factors like global commodity prices. These conclusions are robust to excluding extractable products (oil and minerals) and other commodities. Moreover, African Big Hits exhibit similar patterns as Big Hits in non-African countries. We also discuss some concerns about data quality. These stylized facts are inconsistent with the traditional view that sees African exports as a passive commodity endowment, where changes are driven mostly by global commodity prices. In order to better understand the determinants of export success in Africa we interviewed several exporting entrepreneurs, government officials and NGOs. Some of the determinants that we document are conventional: moving up the quality ladder, utilizing strong comparative advantage, trade liberalization, investment in technological upgrades, foreign ownership, ethnic networks, and personal foreign experience of the entrepreneur. Other successes are triggered by idiosyncratic factors like entrepreneurial persistence, luck, and cost shocks, and some of the successes occur in areas that usually fail.