The rise of the knowledge economy not only promised a new model of growth, with innovation building upon innovation to drive productivity ever higher. Critical to its appeal was the promise of a surfeit of highly paid, highly skilled jobs; at least for those developed democracies enlightened enough to adopt an economic strategy centred around social investment. True, even optimistic advocates of the knowledge economy recognized that technological progress would lead to changes in the nature of work and to the loss of certain types of routine jobs. However, they anticipated that the knowledge economy would generate proportionately more new opportunities for better work, and consequently that technological and economic change could improve the lot of the overwhelming majority. The new jobs created would not only be well remunerated but would also provide workers with cognitively stimulating problems to solve and the autonomy necessary to think creatively about solutions.

This prediction was premised on the expectation that knowledge-intensive industries would continue to grow their workforces as the knowledge economy expanded, and that developed democracies that invested in educating their citizens would be well positioned to secure a disproportionate share of this jobs growth. It also depended on the “knowledgification” of existing jobs, with a better-educated workforce capable of adding more value (and thus commanding higher salaries), even when employed in what had historically been lower-skilled roles and industries.

The high-skill, high-wage economy

Has the expansion of high-skilled work that earlier advocates of the knowledge economy once promised taken place? In a word, yes. Over the last three decades, developed democracies have seen knowledge workers account for an increasingly large proportion of the overall workforce. More and more people are employed as scientists, architects, software engineers and management consultants; more and more people work in knowledge-intensive sectors such as finance, education and healthcare. Data compiled by Maarten Goos, Alan Manning and Anna Solomons for a selection of EU countries show that, between 1993 and 2010, employment rates in higher-skilled occupations such as corporate managers, healthcare professionals and engineers did indeed increase across the board. More recent research by the OECD, using the same classification system but covering more countries and a longer time period, confirms these trends (see Figure 6.1).