Job Complementarities in Employment: Consequences for Minorities – JOCE

Mathematical modelling and econometric analysis.

After 18 months the main results are still unclear.

After 18 months the outstanding features are still unclear.

Combes , Démuruger, Li, and Wang, “Unequal Urbanisation and Migration Gains in China” Journal of Development Economics 142, 2020

In “Why are there still so many jobs?” David Autor maintains that economists tend to focus on technological substitutabilities rather than complementarities. For example, ATM machines have been argued to substitute for bank tellers thus destroying such middle-skill jobs. Yet, ATM machines also decreased the cost of managing a bank branch and therefore the number of branches rose, with consequences for the employment of bank tellers that could now focus on other customer-oriented services. Such complementarities appear in many aspects of economic activity and yet their implications have until now been under-studied. The aim of this project is to consider the impact of job complementarities in employment on various economic outcomes.
The degree of complementarity between different categories of workers is a key dimension determining labour market outcomes. Moreover, these complementarities evolve over time. In a predominantly manufacturing economy, the key question was the interaction between capital and labour, but the move to a service economy has changed this and over the past 40 years a growing complementarity across different groups of workers has appeared. It is hence important to understand who works with whom (at the level of the firm, the city or the region) if we want to explain the labour market performance of different groups, notably of minorities.

Complementarities can arise at many levels, but we intend to focus on three features. The first concerns different skill groups. Complementarities may exist at the level of the firm since low-skill workers provide business services that increase the productivity of the skilled, or of the city as the personal service sector is low-skill intensive and hence these workers provide the amenities that attract the most productive individuals to urban centers. A second dimension of complementarity relates to the geographical origin of individuals. The small effect of immigration on local wages found in empirical studies can best be explained by the fact that the type of skills supplied by immigrants is a complement to the native skills, yet this hypothesis has not been fully tested on the data, particularly for middle- and low-income countries. Lastly, it is also possible to think of complementarities arising at the level of the household. Domestic services are also provided by those at the bottom of the skill distribution raising the question of whether the expansion of this sector has been a factor in the increase in high-skilled female labour force participation.

Our project will consider these different sources of complementarities to deepen our understanding of how they shape wage dispersion across different groups and will hence contribute to explaining the causes and consequences of inequality. A first research axis will allow us to understand how skill polarization affects labour market outcomes. Second, we will examine the interplay between migrants and natives attempting to assess how the former affect labour market outcomes of non-migrant co-workers. We will then turn to complementarities across skill groups within cities, while a fourth area of work will address complementarities within households. The project will have a major empirical component, but also make theoretical contributions, and will make extensive use of existing micro-datasets like the DADS for France, the BHPS of the UK, or the Chinese mini-Census. The analyses will allow us to assess how changing complementarities in production affect income gaps across skill groups, the relative position of migrants, gender inequality, and social mobility.

Our project fits into Défi 8: Sociétés innovantes, intégrantes et adaptatives, Axe 2 : Inégalités, discriminations, integration, radicalisation, and Axe 3: Mutations du travail et de l’emploi of the call for projects.