How technology and globalisation are transforming the labour market

This chapter documents the impact of two megatrends, technological progress and globalisation, on OECD labour markets over the past two decades, with a focus on the process of job polarisation and de-industrialisation. As both of these phenomena are associated with severe disruption in workers’ lives and rising inequality, they have given rise to growing concerns and uncovering their root causes is of fundamental importance for policy. The chapter begins by presenting key indicators of technology diffusion, participation in global value chains and international trade, and up-to-date evidence on job polarisation. It then analyses the relationship between polarisation and de-industrialisation, and employs econometric techniques to assess the impact of technology and globalisation on these phenomena. Technology displays the strongest association with both polarisation and de-industrialisation. The role of globalisation is less clear-cut, but there is some indication that international trade has contributed to de-industrialisation. Based on this evidence, the chapter outlines the key policy tools to help workers to successfully navigate the ongoing transformation of the labour market and reap the benefits of technological progress.