The present paper contributes to the debate on the influence of technological change on labour with an empirical study of the evolution of employment in Spanish local labour markets. It builds on and contributes to existing literature by:
(i) Disentangling the structural changes of employment in Spain;
(ii) Gauging how these effects play out across different geographical areas.
Using data of the Population and Housing Census Survey for three decades (1981-2011) we observe a significant (about 8%) growth of employment in service occupations which stands in in contrast with the decline of other low-skill occupations (e.g. construction, transportation, mechanics, farm, mining and craft). This is of interest for three reasons. First, service employment accounts for the highest share of part-time jobs (as high as 50% of all low-skill employees in 1991). Second, service jobs entail an average wage gap of about 50% compared to similarly low-educated occupations. Lastly, the educational profile of among service workers has evolved strikingly similar to that of mid-skill (e.g. clerical, production) workers.
Our estimates indicate that the increase in service employment is stronger in provinces with the highest shares of educated workers (at least college education). We also find that the share of ROU employment in the previous decade is a robust predictor of the growth of NRM jobs. Lagged unemployment levels have a negative association with low-skill service employment, which suggests the prominence of structural factors rather than a business cycle effect. Lastly, low-skill job growth is higher among provinces with stronger HC creation capacity. These results are robust to the inclusion of instrumental variables that take into account the long-term pattern of industrial specialization of each local labour market.