Brain over Brawn: Job Polarization, Structural Change, and Skill Prices
Abstract
This study investigates the effects of brain and brawn skills on wages and the changes in wage distribution in Thailand using the Labor Force Survey (LFS) from 1985 to 2020. We quantify the contribution of changes in the skill requirement and highlight the increase in the return on brain and the decrease in the penalty on brawn, which helps explain the wage distribution changes across periods. We further explore the polarization in the labor market and analyze 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.
