Within and between firm trends in job polarization: Role of globalization and technology

This paper analyzes occupational polarization within and across firms using comprehensive matched employer - employee panel data from Finland. As in most industrialized countries the occupational distribution in Finland has been polarizing over the last few decades, with the mid - level jobs eroding while the low - skill service occupations and high - skill specialist occupations gain share. We find that the phenomenon is taking place within existing firms, as well as due to firm entry and exit. Service jobs are increasing particularly through the entry and exit dynamics, while the same dynamics are mostly responsible for the eroding of mid - level plant operating jobs. The share of high - level occupations increases almost equally within and between firms. Within the continuing firms the job polarization appears to be related to the trade of goods and services, as well as the outsourcing of tasks. Firms with high R&D expenditures are less prone to lay off process and production workers. To evaluate the causal effect of increased trade and offshoring we plan to utilize the very detailed Finnish Customs data on firm - product level imports and exports of goods and services along with the international COMTRADE data on the movement of goods across countries to build an instrumental variables (IV) estimation along the lines of Hummels et al. (AER 2013). These results will shed new light on the polarization of the labor market in Scandinavia as well as provide a deeper understanding of the firm level dynamics that are contributing to occupational polarization.