Abstract

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. This paper analyses the importance of labour demand and supply factors in the observed job polarisation in the UK, between 1992 and 2008. First, it provides an estimates of the skill 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-biased technical change affecting the UK over the period. Using counterfactual analysis it is 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.