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Automation and labor force participation in advanced economies: Macro and micro evidence

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  • Grigoli, Francesco
  • Koczan, Zsoka
  • Topalova, Petia

Abstract

Technological advances raise productivity and growth, but are also likely to reshape labor markets. We examine the impact of automation on aggregate labor force participation rates and individuals’ attachment to the workforce in advanced economies. Cross-country analysis, which leverages the variation in the routinizability of occupations and occupational composition, points to significant negative effects of automation on the participation rates of prime-age men and women. Individual-level analysis confirms that workers previously employed in routinizable occupations are more likely to drop out of the labor force. Encouragingly, higher spending on active labor market programs and education are, however, associated with smaller negative effects of technological change on participation.

Suggested Citation

  • Grigoli, Francesco & Koczan, Zsoka & Topalova, Petia, 2020. "Automation and labor force participation in advanced economies: Macro and micro evidence," European Economic Review, Elsevier, vol. 126(C).
  • Handle: RePEc:eee:eecrev:v:126:y:2020:i:c:s0014292120300751
    DOI: 10.1016/j.euroecorev.2020.103443
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    More about this item

    Keywords

    Labor force participation; Technology; Automation; Routinization;
    All these keywords.

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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