## The Hollowing Out of Middle-Skilled Labor Share of Income

_IMF Blog, April 14, 2017_

## Source details

**Canonical URL:** [The Hollowing Out of Middle-Skilled Labor Share of Income](https://www.imf.org/en/blogs/articles/2017/04/14/the-hollowing-out-of-middle-skilled-labor-share-of-income)

## Other formats

- [Markdown version](/en/blogs/articles/2017/04/14/the-hollowing-out-of-middle-skilled-labor-share-of-income/index.md)
- [Structured JSON version](/en/blogs/articles/2017/04/14/the-hollowing-out-of-middle-skilled-labor-share-of-income/index.json)
- [Bundle manifest](/en/blogs/articles/2017/04/14/the-hollowing-out-of-middle-skilled-labor-share-of-income/bundle-manifest.json)

## Bibliographic details
- Authors: Mai Dao, Mitali Das, Zsoka Koczan, Weicheng Lian
- Published: April 14, 2017

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### Overview
- 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.

### Evidence and methodology
- 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.

### Key findings
- 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.

### Policy recommendations and implications
- 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.*

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## Content in this bundle

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  - [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)](/external/japanese/np/blog/2017/041417j.pdf){rel="external" type="application/pdf"}
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  - [Сокращение доли доходов рабочей силы средней квалификации (Markdown version)](/external/russian/np/blog/2017/041417r.pdf.md){rel="alternate" type="text/markdown"}
  - [Сокращение доли доходов рабочей силы средней квалификации (PDF)](/external/russian/np/blog/2017/041417r.pdf){rel="external" type="application/pdf"}

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## References

- [عربي](https://blog-montada.imf.org/?p=5312)
- [blog](https://blogs.imf.org/2017/04/12/drivers-of-declining-labor-share-of-income/)
- [Chapter 3](http://www.imf.org/en/Publications/WEO/Issues/2017/04/04/world-economic-outlook-april-2017)
- [World Economic Outlook,](http://www.imf.org/en/publications/weo)
- [cross-country index](http://www.imf.org/)

_Source: https://www.imf.org/en/blogs/articles/2017/04/14/the-hollowing-out-of-middle-skilled-labor-share-of-income_