Job polarisation and the race between technology and skills in the UK

As many other advanced economies, the labour market in the United Kingdom have polarised in the recent decades, with jobs in middle income or skill occupations disappearing. Whilst the literature proposes several channels, one has been particularly neglected, namely the evolution of skills (ability) across the population over time. This paper analyses the importance of skills in the observed job polarisation in the UK, between 1992 and 2008. First, it provides an estimates of such skills distributions at the task level, using the British Household Panel Survey. Importantly, such estimations includes the ability of workers in tasks in which they are observes and their counterfactual ability in occupations in which they are not observed. This is a novel contribution to the literature. Using these estimated distributions (positive-skewed), a simple model is used to identify the nature of task-based technical change affecting the UK over the period. Using counterfactual analysis itis shown that the change in skills played little role in observed polarisation patterns; technological change is to blame for such developments. In other words, in the United Kingdom, the recent race between technology and education was won by the former.