Over the past decade, a widespread process of organizational restructuring has begun to take place, calling into question the need for extreme specialization of work and standardization of products. This process leads to demands for new combinations of skills and, as a result, to new patterns of labour market inequality in terms of wages and employment opportunities. In Discussion Paper No. 1375, Assar Lindbeck and Research Fellow Dennis Snower examine the consequences of these developments for the reorganization of work, the move towards multi-tasking and the resulting breakdown of occupational barriers, the transformation of job opportunities, and the implications for wage inequalities.

The analysis shows how these changes can segment the labour market into an expanding sector of restructured firms where wages are rising, a contracting sector of traditional firms where wages are relatively stagnant, and an expanding pool of jobless. The theory outlined in this paper can be seen as a potential first step towards providing a new understanding of a constellation of seemingly disparate phenomena: the increased versatility of work; the widening dispersion of wages within occupational, educational and job tenure groups; the narrowing of male-female wage differentials; the decline of centralized bargaining; and the growing importance of broad-based education.

Reorganization of Firms and Labour Market Inequality
Assar Lindbeck and Dennis J Snower