Daniele Siena

amse seminar
macro and labor economics seminar

Daniele Siena

Politecnico di Milano
Job polarization, labor market fluidity and the flattening of the Phillips Curve
Joint with
Riccardo Zago
Venue

IBD Amphi

Îlot Bernard du Bois - Amphithéâtre

AMU - AMSE
5-9 boulevard Maurice Bourdet
13001 Marseille

Date(s)
Monday, October 3 2022| 11:30am to 12:45pm
Contact(s)

Ewen Gallic: ewen.gallic[at]univ-amu.fr
Avner Seror: avner.seror[at]univ-amu.fr
Andreas Dibiasi: andreas.dibiasi[at]univ-amu.fr
Céline Poilly: celine.poilly[at]univ-amu.fr

Abstract

This paper shows that job polarization –i.e. the disappearance of routine jobs– is changing the characteristics of the labor market. This has structural implications for the relationship between inflation and unemployment, the price Phillips Curve (PC). Using data from the European Monetary Union (EMU) and exploiting the fact that job polarization accelerates during recessions, we obtain two empirical results. First, countries experiencing a bigger shift in the occupational structure during a downturn exhibit a flatter PC afterward. Second, the occupational shifts experienced during the Great Recession and the Sovereign Debt Crisis explain up to a fourth of the flattening of the curve in the 2002-2018 period. Then, we reconcile this evidence through a New Keynesian model with unemployment and search and matching frictions. We show that increasing labor market fluidity –i.e. higher separation and hiring rate– decreases the slope of the PC. Using micro-data, we find that in the EMU non-routine jobs are more fluid. We conclude that job polarization flattened the PC.