Job Polarization and Task-Biased Technological Change: Evidence from Sweden, 1975-2005

In this paper, we show that between 1975 and 2005, Sweden exhibited a pattern of job polarization with expansions of the highest- and lowest-paid jobs compared to middle-wage jobs. The most popular explanation for such a pattern is the hypothesis of task-biased technological change, where technological progress reduces the demand for routine middle-wage jobs but increases the demand for non-routine jobs located at the tails of the job-wage distribution. However, our estimates do not support this explanation for the 1970s and 1980s. Stronger evidence for task-biased technological change, albeit not conclusive, is found for the 1990s and 2000s. In particular, there is both a statistically and economically significant growth of non-routine jobs and a decline of routine jobs. However, results for wages are mixed; while task-biased technological change cannot explain changes in between-occupation wage differentials, it does have considerable explanatory power for changes in within-occupation wage differentials.