Brain over brawn: Job polarisation, structural change, and skill prices

Abstract

This study investigates the relationship between occupational skills and wages in Thailand using the Labour Force Survey from 1985 to 2020. We quantify the contribution of changes in the skill requirement and highlight the increase in the return on the ‘brain’ and the decrease in the penalty on ‘brawn’, which helps explain the wage distribution changes across periods. We further explore the polarisation in the labour market and analyse the changes in the wage distribution by applying the decomposition method proposed by Firpo et al (2009). Our results suggest that wage dispersion increases in the top end over the first two time periods but decreases in the third time period, while it continues to decrease in the lower end of the distribution.