Introduction

Economic inequalities and a lack of wage growth among those in work have become defining domestic policy challenges. Technology is enabling and encouraging more specialisation by firms in the tasks they carry out, which may impact workers by changing their opportunities for career progression and the competitive structure of the labour market. This project applies data science techniques and microeconometric methods to UK microdata in order to understand how specialisation has affected the employment opportunities of different kinds of workers.

This project received funding from the Turing-HSBC-ONS Economic Data Science Awards 2018.

Explaining the science

Recent technological advances are changing the world of work, expanding opportunities of some workers but potentially limiting those of others. Technological change may have also enabled firms to specialise in certain tasks to a greater extent than in the past. This project investigates how the pay and career prospects of different types of workers have been affected by changes in firm specialisation.

At least two mechanisms can drive effects of specialisation on careers and wage progression. Firstly, specialisation may result in the concentration of occupations in fewer firms and industries. For workers in some occupations, this may narrow the set of potential employers and reduce the ability of workers to negotiate wages, hence leading to lower pay. Higher concentration may also affect the composition of potential employers for a specific occupation, thereby affecting the chances of workers in that occupation to work for a high-paying firm. For example, job opportunities and wages for cleaners in a labour market where cleaning is provided by a small number of low-paying cleaning firms could differ markedly from the opportunities in a world where a large number of firms employed in-house cleaners. 

Secondly, specialisation may also reduce the diversity of occupations within firms and industries. This may make upward occupational mobility harder to achieve, inhibiting workers’ ability to progress by moving up the occupational ladder.

This project will empirically investigate the importance of both mechanisms in influencing the labour market outcomes of different types of workers and map how they have changed over time.

Project aims

This project aims to quantify changes in workplace specialisation for the first time and examine the impacts of specialisation on different types of workers.

Detailed measures of specialisation will be developed using a rich combination of large UK micro datasets in order to characterise how different occupations have become more or less concentrated across different industries and firm types. New measures of labour market segmentation will be built based on patterns of people changing their jobs, which will shed light on how changes in firm specialisation have affected the ability of workers to access higher-paying jobs. By relating these changes to general trends in occupations, the effects of specialisation on the career prospects of different types of worker will be mapped. Linked measures of technological intensity from administrative data on R&D expenditures will also be used to examine the complementarity of certain skills with innovation.

This work will provide new evidence on the structure of the labour market. This will enhance understanding of how the UK labour market evolved over time and will shed light on how current economic challenges, such as low pay progression, have been affected by changes in firm specialisation.

Applications

This project will be conducted with researchers from the Institute for Fiscal Studies, which occupies a unique position in bridging the gap between academic work and policy debate. This will allow for research findings to be directly shared with policy makers through talks, seminars, and government consultations, helping to inform significant policy making decisions.

Recent updates

Project is due to start on 1 January 2019.

Researchers and collaborators

Contact info

[email protected]

Funders