The Dynamics of Skills: Technology and Business Cycles

Building on studies on the impact of the Great Recession on the skill structure of employment (Card and Mas, 2016), this article investigates developments over the last business cycle (2002-2007 and 2007-2011) in 38 manufacturing and service industries of five major European countries (Germany, France, Spain, Italy and United Kingdom). We analyze how technology, education and wages have shaped the evolution of four professional groups – Managers, Clerks, Craft and Manual workers – defined on the basis of ISCO classes. During the upswing in manufacturing industries all professional groups except managers have experienced job losses, while new jobs in services have followed a pattern of growing skill polarization. Demand growth has a general positive effect across all skills; new products lead to job creation in the group of managers only; wage increases slow down job creation except in the lowest skill group. During the downswing large job losses are concentrated in the lowest skills and most relationships – including the role of demand and wages -break down; product innovation loses its positive impact on jobs while new processes drive restructuring and job destruction across all groups.

working_paper_2016_7_coverThe Dynamics of Skills: Technology and Business Cycles

Valeria Cirillo
Sant’Anna School of Advanced Studies

Mario Pianta
Università di Urbino Carlo Bo

Leopoldo Nascia
Istat, Rome

Working Paper
7/2016 January