Job Market Polarization and Employment Protection in Europe

Although much attention has been paid to the polarization of national labor markets, with employment and wage growth occurring in both low- and high- but not middle-skill occupations, there is little consistent evidence on cross-country differences in this process. I analyze job polarization in 12 European countries using an occupational skill-intensity measure, which is independent of country-specific labor supply conditions. Extensive cross-country differences in the extent of polarization correspond to variation in economic conditions and to dissimilarities in the employment protection legislation.