Is There Job Polarization in Developing Economies? A Review and Outlook

CESifo Working Paper No.9444

This paper analyses the evidence of job polarization in developing and emerging economies. We carry out an extensive literature review, revealing that job polarization in these countries is only incipient compared to other advanced economies. We then examine the possible moderating aspects explaining this job polarization paradox. Overall, the literature relates the lack of polarization to limited technology adoption, structural change, and the offshoring of routine, middle-earning jobs from advanced to developing economies. Furthermore, the limited technology adoption results from lower capabilities in those economies, including the insufficient supply of educated workers. Policies supporting technological development in these countries, therefore, need to address those labor constraints as well as create a safety net to support the workers harmed by such a transition. Finally, new microeconomic data and empirical analyses should be developed in order to guide evidence-based policymaking addressing those issues in developing and emerging economies.