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Outsourcing of cognitive tasks to blame for polarized labor market, not technology

A bottling production line

In recent decades labor markets in many developed countries have become increasingly polarized: middle-wage occupations have been declining, while employment in both high- and low-wage occupations has increased. Many studies point to increasing automation and offshoring of routine middling jobs as the main drivers of this phenomenon; however, little research has focused on these changes at the firm level. Because not all firms have the same characteristics (wage levels, management strategies, etc.), different organizational structures and behavior in firms could be pushing some of this labor market polarization.

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Image credit: The Manufacturer