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Automation, Labor Markets, and Trade

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  • Alejandro Micco

Abstract

Digital technologies, robotics, and artificial intelligence substitute tasks performed by labor are bringing back old fears about the impact of technology on labor markets and international trade. The aim of this paper is to provide evidence about the causal effect of automation on the labor market and sectoral US imports. We use robots per workers, instrumented by robot penetration in Europe, to study employment in almost 800 occupations in 285 industries in the US during 2002-2016. We use Autor et al (2003) and Frey and Osborne (2017) methodologies to define occupations at risk of automation and to study their behavior after robots´ penetration. We find that employment in occupations at risk has been declining at an annual rate of 2.0-2.5%, relative to other occupations. This result is mainly driven by a substitution effect within industries defined at the 4-digit NAICS level. One standard deviation increase in robots per worker reduces employment growth by 1.25-1.45% in occupations at risk compared to the other professions in the same sector. Industries with a higher share of occupation at risk have a lower rate of employment growth during the period 2002-2016. Also, imports of commodities produced by these sectors have been falling, in particular from countries with lower penetration of automation technologies. This result suggests that automation is changing countries´ comparative advantage.

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  • Alejandro Micco, 2019. "Automation, Labor Markets, and Trade," Working Papers wp486, University of Chile, Department of Economics.
    • Handle: RePEc:udc:wpaper:wp486
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    1. David H. Autor & David Dorn & Gordon H. Hanson, 2016. "The China Shock: Learning from Labor-Market Adjustment to Large Changes in Trade," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 205-240, October.
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    7. Chor, Davin & Manova, Kalina, 2012. "Off the cliff and back? Credit conditions and international trade during the global financial crisis," Journal of International Economics, Elsevier, vol. 87(1), pages 117-133.
    8. Frey, Carl Benedikt & Osborne, Michael A., 2017. "The future of employment: How susceptible are jobs to computerisation?," Technological Forecasting and Social Change, Elsevier, vol. 114(C), pages 254-280.
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    Cited by:

    1. Stemmler, Henry, 2023. "Automated Deindustrialization: How Global Robotization Affects Emerging Economies—Evidence from Brazil," World Development, Elsevier, vol. 171(C).
    2. Luis R. Diaz Pavez & Inmaculada Martinez-Zarzoso, 2023. "The impact of local and foreign automation on labor market outcomes in emerging countries," Working Papers 2023.01, International Network for Economic Research - INFER.
    3. Diaz Pavez, Luis R. & Martínez-Zarzoso, Inmaculada, 2021. "The impact of local and foreign automation on labor market outcomes in emerging countries," University of Göttingen Working Papers in Economics 423, University of Goettingen, Department of Economics.

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