This thesis studies the cyclical aspect of job polarization in Europe. Contributions include offering a comparison to the findings of previous research on the United States, and extending the analysis by introducing labor market institutions. The analysis is done in two parts, first showing that the observed link between job polarization and jobless recoveries in the US is observed in Europe, but not across all countries and business cycles. In Scandinavia, the process of job polarization appears smoother than the spurts observed in the US. The second part involves regression analyses of the relationship between labor market institutions, the business cycle and occupational employment. The results indicate that stricter labor market institutions are less robustly associated with Routine employment than other occupational groups and that Routine employment is more sensitive to the business cycle than other types of employment. Further, rigid labor market institutions may prevent some of the Routine decline associated with economic downturns, while not necessarily affecting the long run employment. Limitations of the analysis regards rough estimates of the key variables, number of observations and the lack of identification associated with cross-country analyses.

Income inequalities have become a matter of major concern following reports that the working class and lower middle class of developed economies have income levels that are falling behind. Few studies have been conducted on the regional level even though this perspective might better capture the development of income inequalities, since national averages might hide local differences. This study uses panel data for 286 Swedish municipalities in between 1991-2017 and fixed effect regressions, to examine if the theory of a skill-biased technological change could be used to explain resent developments. We find an labor income divergence for Swedish municipalities within the studied time period. The share of high skilled workers is found to be a good predictor of the growth in regional labor income inequalities, while an ageing population of the regions falling behind counteracts the growth of inequality, possibly leading to an underestimation of the size of regional labor income divergence. These results are in support of a skill-biased technological change at work and a job polarization transforming regional labor markets and regional societies. We conclude that adopting a regional perspective in the analysis and development of future economic growth policies is necessary to ensure long term economic growth, equality of opportunity and social cohesion.