Trends, cycles and institutions : -Job polarization and the business cycle in Europe

Sammanfattning: This thesis studies the cyclical aspect of job polarization in Europe. Contributions include offering a comparison to the findings of previous research on the United States, and extending the analysis by introducing labor market institutions. The analysis is done in two parts, first showing that the observed link between job polarization and jobless recoveries in the US is observed in Europe, but not across all countries and business cycles. In Scandinavia, the process of job polarization appears smoother than the spurts observed in the US. The second part involves regression analyses of the relationship between labor market institutions, the business cycle and occupational employment. The results indicate that stricter labor market institutions are less robustly associated with Routine employment than other occupational groups and that Routine employment is more sensitive to the business cycle than other types of employment. Further, rigid labor market institutions may prevent some of the Routine decline associated with economic downturns, while not necessarily affecting the long run employment. Limitations of the analysis regards rough estimates of the key variables, number of observations and the lack of identification associated with cross-country analyses.