Job Polarization and Unskilled Employment Losses in France.

Summary This paper provides an explanation for the decline in unskilled employment in a context of job polarization in France between 1982 and 2008. I argue that job polarization induced significant unskilled employment losses. Unskilled employment losses were enhanced by high and increasing labor taxation until 1993 while this trend has been mitigated by the implementation of labor cost reduction policies since then. The key mechanism is that job polarization displaces unskilled workers from routine jobs toward manual jobs and non-market work. Labor taxation interacts with job polarization by changing the value of unskilled jobs with respect to non-market work.