A large and growing empirical literature has presented evidence of job polarization, i.e. the simultaneous growth of high-wage jobs and low-wage jobs at the expense of middle-wage jobs. Thus far, the focus has been on employment in different occupations, without taking into account the role of firms in the labor demand process.
The purpose of this paper is to bridge this knowledge gap by explicitly analyzing how firms influence the current process of job polarization. Using detailed Swedish matched employer-employee data for the 1997–2013 period, we present novel evidence on within-firm job polarization. Applying a decomposition framework, we also find that both within-firm and between-firm components are important for overall job polarization.
We also show how the within-firm pattern is related to explanations for job polarization that have been proposed, i.e. the influence of routine-based technological change and the offshorability and automation of jobs. The results indicate that routineness of jobs seems to be the most important factor behind the observed pattern of within-firm job polarization.