Social Sciences Job Candidate Seminar

Abstract:  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.