The Hollowing Out of Middle-Skilled Labor Share of Income

IMF Blog, April 14, 2017

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Authors: Mai Dao, Mitali Das, Zsoka Koczan, Weicheng Lian
Date: April 14, 2017
Main theme: Technological advancement and global integration have contributed to a decline in the labor income share of middle-skilled workers in advanced economies, with larger declines in sectors more exposed to automation.

Constructed a new cross-country index covering both advanced and emerging economies that measures the share of occupations at risk of being automated.
Technological progress proxied by the evolution of investment goods prices.
Analysis links initial exposure to routinization and subsequent changes in labor income shares at the country and sector level.

Between 1995 and 2009, the global income share of low- and middle-skilled labor dropped by more than 7 percentage points.
The income share of high-skilled labor rose in both advanced and emerging market economies.
Countries and sectors with high initial exposure to routinization experience relatively larger subsequent declines in labor income shares (example: manufacturing sector in the United States and Italy).
Sectors with low initial exposure to routine tasks see less decline in labor income shares (example: restaurants and hotels in the United States).
Technology and global integration have primarily affected the income share of middle-skilled labor, consistent with exposure to routinization and offshoring lowering demand for middle-skilled workers, causing wage stagnation or relocation to low-skill and low-pay occupations.
For emerging market economies, the effect of technology on labor income shares is less pronounced due to a much lower initial exposure to automation and a relatively mild decline in the relative price of investment goods.

In advanced economies:
- Focus on helping workers cope with disruptions through skill upgrading throughout workers’ careers.
- Implement policies that facilitate the reallocation of displaced workers to new jobs and reduce the cost of job search and transitions.
- Consider safety nets and income support policies, tailored to country-specific circumstances; workers displaced by technology may need longer-term redistributive measures.
In emerging market economies:
- Invest in education and skill deepening to prepare workers to reap the benefits of transformation induced by technology and global integration.
Broader prescription:
- Embrace innovation and global integration while preparing for and managing their disruptive effects to distribute benefits more evenly.

Source: The Hollowing Out of Middle-Skilled Labor Share of Income, April 14, 2017.

中等技能劳动力收入份额空洞化; IMF博客
- 中等技能劳动力收入份额空洞化; IMF博客 (Markdown version)
- 中等技能劳动力收入份额空洞化; IMF博客 (PDF)
中間スキル労働者所得比率の空洞化 : マイ・ダオ、ミタリ・ダス、ジョカ・コザン、ウェイチャン・リャン; IMF ブログ 2014年4月14日掲載
- 中間スキル労働者所得比率の空洞化 : マイ・ダオ、ミタリ・ダス、ジョカ・コザン、ウェイチャン・リャン; IMF ブログ 2014年4月14日掲載 (Markdown version)
- 中間スキル労働者所得比率の空洞化 : マイ・ダオ、ミタリ・ダス、ジョカ・コザン、ウェイチャン・リャン; IMF ブログ 2014年4月14日掲載 (PDF)
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- Сокращение доли доходов рабочей силы средней квалификации (Markdown version)
- Сокращение доли доходов рабочей силы средней квалификации (PDF)