Central to the previous UK Government’s ‘high-skill vision’ was the notion that technological progress uniformly drove up the demand for skilled labour. However, it had also begun to recognise the possibility that technological progress may lead to a growth in both good jobs and bad jobs, and a decline in middling jobs (see DWP and DIUS 2008, DBIS 2010). Often this is described as the polarisation hypothesis, the hourglass economy or the ‘hollowing-out ’ of the labour market. It is still too early to say what view the coalition government will take, so it is timely to question how significant this hypothesis is for policies relating to skills and the labour market. This Issue Paper presents an overview of this literature and, in assessing its key ideas, draws upon new SKOPE research on labour market segmentation.