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Automation Risk, Innovative Capital, and Labour Market Outcomes : Evidence from Japan

Author

Listed:
  • FUKAO, Kyoji
  • IKEUCHI, Kenta
  • NAGAYA, Yoshiaki
  • PERUGINI, Cristiano
  • POMPEI, Fabrizio

Abstract

This study provides an empirical assessment of the relationship between automation risk and labour market performance. To this aim, we use as a key original information the Automation Risk Index (ARI), a new dataset that quantifies the exposure of Japanese occupations and industries to artificial intelligence and robotic technologies at a highly disaggregated level. Our findings indicate that a higher intensity of innovative capital—including ICT infrastructure, AI technologies, and robotics—is associated with lower employment and wage levels. At the same time, these adverse effects are considerably attenuated in industries where occupations face a lower risk of automation, with the mitigating impact being particularly evident for highly educated, male, and younger workers. Overall, the evidence points to the importance of both reduced automation exposure and complementarities between workers' skills and advanced technologies in sustaining workers' bargaining position and limiting the negative labour market consequences of technological change.

Suggested Citation

  • FUKAO, Kyoji & IKEUCHI, Kenta & NAGAYA, Yoshiaki & PERUGINI, Cristiano & POMPEI, Fabrizio, 2026. "Automation Risk, Innovative Capital, and Labour Market Outcomes : Evidence from Japan," CEI Working Paper Series 2026-03, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    • Handle: RePEc:hit:hitcei:2026-03
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    File URL: https://hit-u.repo.nii.ac.jp/record/2062445/files/wp2026-03.pdf
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    Keywords

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    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • 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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