Essays on the political economy of employment polarisation: global forces and domestic institutions

This thesis investigates the political economy of employment polarization focusing on the implications of this phenomenon along three main research fronts. The first paper follows a methodology which resembles closely the one adopted by Goos, Manning and Salomons (2014), however it further extends this framework by testing the joint effect of routinization and labour market institutions on employment structures. The evidence provided suggests that the claim of a pervasive technology-induced polarization should be revised in order to comprise a role for the institutional component. The second paper explores whether job polarization has a feedback effect on labour market institutions and policies, so that different degrees of polarization lead to different articulations of institutions at the domestic level, thus reinforcing or altering differences in national models across the European space. The analysis finds that the job polarization experienced by a particular country in the 5 years before a reform instance is consistently among the strongest predictors of reform activity, as significant as other drivers such as GDP growth and government net debt. Moreover, a higher degree of polarization tends to be associated with more deregulation and a decrease in the generosity of the policy measure. The empirical framework is also tested against more conventional taxonomies of welfare capitalism revealing that LMEs tend to harness job polarization dynamics whereas CMEs are incompatible with job polarization which destabilizes the system leading to an increased need for reforms. The final paper asks whether the U-shaped impact on the wage distribution predicted by the job polarization literature has actually materialized in Europe. The findings show that job polarization increased upper-tail inequality (90/50) and decreased lower-tail (50/10) inequality but that employment protection legislation restrained the wage effects