The changing skill composition of labour demand

Researchers in both North America and Europe have documented evidence of a pronounced shift in the composition of labour demand favouring more skilled workers. Similar claims have been made with respect to employment in the Australian labour market, but these claims have been challenged on the grounds that there is no general trend towards upskilling. Evidence presented by Cully (1999) led him to conclude that changes in the composition of employment have favoured both the most skilled and the least skilled - that the demand for labour has become increasingly polarised. In this paper, it is argued that neither of these explanations is correct. Instead, it is claimed that focusing on the numbers of persons employed is misleading and that when data are adjusted for hours worked, the Australian employment experience is entirely consistent with the international evidence. Furthermore, comparisons over time are likely to be sensitive to the period chosen for such comparisons. The analysis reported here uses start and end points that appear to be at similar stages in the business cycle (1989 and 2000) and hence the differential rates of employment growth across occupations are less likely to be the result of cyclical influences.

Published abstract reprinted by permission of the copyright owner.

Researchers in both North America and Europe have documented evidence of a pronounced shift in the composition of labour demand favouring more skilled workers. Similar claims have been made with respect to employment in the Australian labour market, but these claims have been challenged on the grounds that there is no general trend towards upskilling. Evidence presented by Cully (1999) led him to conclude that changes in the composition of employment have favoured both the most skilled and the least skilled - that the demand for labour has become increasingly polarised. In this paper, ...  [+] Show more