NBER – “Non-college-educated workers in cities are far less likely to work in middle-skill occupations than in the past, and the urban wage premium has sharply eroded. American cities have historically been centers of opportunity, beckoning workers from elsewhere with the promise of economic mobility. In Work of the Past, Work of the Future (NBER Working Paper No. 25588), David Autor concludes that’s a promise cities may no longer be able to keep. He finds that non-college-educated workers in cities are far less likely to work in middle-skill occupations than in the past. What’s more, their shift into low-skilled jobs has come with a steep decline in the wage premium that urban centers once offered.
The hollowing out of middle-skill jobs has remade labor markets across the United States, leaving behind mostly low-skill, low-paid jobs on the one hand and high-skill, highly remunerated jobs on the other. Autor examines this job polarization on a geographic basis, yielding a new finding: Polarization has been far more pronounced in urban than in suburban or rural labor markets. The impact of job polarization on urban markets alone has been a key part of the secular fall in wages over the past four decades for workers without a college degree.
Autor identifies three mechanisms through which the drop in wages for non-college workers has occurred. Occupational polarization has shunted non-college workers from middle-skill jobs, such as clerical or factory work, into traditionally low-paid jobs that require little specialized training, for example in the retail and hospitality sectors. Second, because occupational polarization has been much more pronounced in dense urban areas than in suburbs and rural areas, it has differentially diminished the fraction of non-college workers holding middle-skilled jobs in high-wage cities. Finally, and as a result, job polarization has unwound the wage premium for non-college workers residing in cities. This premium prevailed in the decades following World War II….”