Over the past 30 years, skill premiums have grown, jobs in the middle of the skill distribution have become relatively scarce, and turnover rates have fallen among lowskill workers. At the same time, the fraction of the population attending college has increased and much of the manufacturing work force has shifted into services. This paper interprets these patterns through the lens of a dynamic open economy model that characterizes the career paths of heterogeneous workers. Its key features include on-the-job search, accumulation of occupation-specific human capital, and endogenous education decisions. Fit to SIPP panel data on U.S. workers and the World Input-Output Database, the model links labor market developments to recent automation and globalization shocks. Essentially, these shocks shift job creation away from certain occupations, thereby changing job offer arrival rates for each worker type, increasing incentives to invest in college degrees, and changing the ease with which different types of workers can follow alternative career paths. In addition to providing an integrated explanation for the shifting prospects of heterogeneous workers, it provides a basis for the evaluation of various policy interventions, including trade protection and robot taxes.
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