How the consumption preferences of rich and poor households is fuelling inequality and job polarization.

In recent decades the employment structure of the US has been polarizing with low-skill, low-wage and high-skill, high-wage, jobs on the rise at the expense of middle-wage and middle-skill jobs. In new research Marco Leonardi looks at an understudied potential mechanism for this polarization – changes in demand for certain goods and services. Using data from forty years of the Consumer Expenditure Survey, he argues that increasing education levels mean that skill-intensive goods and services tend to be favored by consumers, as are low-skilled services as households substitute them for domestic work.