Wage and employment by skill levels in technological evolution of South and East Europe
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Wage and employment by skill levels in technological evolution of South and East Europe Elisabetta Croci Angelini1 · Francesco Farina2 · Enzo Valentini1
© Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract Occupations and sectors are the two fundamental dimensions of structural change. From the evolution of the high/low-skill employment levels and wage premium, we can study which sectors have been undertaking a process of technical change. We use Eu-Silc database to investigate the technological patterns followed before and after the 2008 crisis by four “Southern Europe” countries (Italy, Spain, Greece, Portugal) and three “Eastern Europe” countries (Poland, Hungary, Bulgaria) in comparison with the UK. Our empirical analysis shows that these two groups of countries follow heterogeneous patterns. Eastern Countries are not suffering from de-industrialization and are more oriented toward SBTC, as they are likely to perform better than Southern Countries. In particular, Poland stands out among the Eastern countries and Portugal among the Southern Countries, because they are closest to the UK in terms of technology ratio (level and dynamics after the crisis) and in terms of SBTC tendency. Keywords Technical change · Skill premium · Country studies JEL Classification O33 · O47 · P51
Enzo Valentini
[email protected] 1
Department of Political Science, Communication and International Relations, University of Macerata, Piazza Strambi n.1, 62100, Macerata, Italy
2
Department of Political Science, Libera Universit`a Internazionale degli Studi Sociali (LUISS), Roma, Italy
E. Croci Angelini et al.
1 Introduction Occupations and sectors are the two fundamental dimensions of structural change. From the last two decades of the past century until the financial crisis, the three most important “stylized facts” of the growth process in advanced countries were the increase of the wage premium for skilled workers, the persistency of unemployment and the falling price of new capital goods (computer, robotics, etc...). This paper focuses on the period of the financial crisis and of the Great Recession, which have made low and middle-skill workers slip into unemployment, while high-skill employment has kept increasing, to a larger extent than observed in the decade preceding the crisis. To infer the strategies followed by firms during the crisis, we conduct statistical estimates concerning wages and employment by skill level in some European economies. On the basis of a theoretical framework, we rely on the Eu-Silc database for the elaboration of the skill premium (SP) and the high-skill/low-skill employment ratio (HR) for sectors of manufacturing and services. The consequent rise in polarization by skill level, for both wage and employment, mainly stemmed from the job losses in manufacturing and the rise of employment in high-tech services (OECD 2017). Moreover, both macroeconomic and microeconomic policies have worked poorly in counteracting the GDP loss (Brada and Signorelli 2012). We define four strat
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