Job training in polarizing job markets: A longitudinal analysis using administrative microdata

Abstract

AbstractDeveloped nations have experienced a longstanding trend of reshaping the labour market's occupational structure. This trend, named job market polarization, describes how middle‐level jobs have decreased their relative share of the labour market in favour of high‐ and low‐complexity jobs. The literature has pointed to technological change as the main factor in setting this configuration, which accompanied the transition to a knowledge economy as a source of competitive advantages. Still, the narratives of technological change are anchored to specific technologies and times that do not fit the emerging challenges of the fourth industrial revolution and the increasing relevance of the digital economy. In this paper, I explore how job polarization dynamics have interacted with active labour market policies' effectiveness by focusing on job training skill premiums. I use nationally representative data to evaluate cross‐sectionally and longitudinally the relationship between job training access, job polarization, and wages. The results show that polarization poses a wage penalty while it increases the relative value of training skill premium. I discuss how the setting of a polarized market could be considered for future skill‐based interventions concerning digital technologies.