Technology and Labor Displacement: Evidence from Linking Patents with Worker-Level Data

We develop measures of labor-saving and labor-augmenting technology exposure using textual analysis of patents and job tasks. Using US administrative data, we show that exposure to labor-saving technologies negatively affects the earnings of exposed workers. This negative effect is pervasive across both blue- and white-collar workers and across workers of different ages or earnings relative to their peers. In contrast, labor-augmenting technologies have a heterogeneous impact on exposed workers. While the wage bill paid to affected groups rises, this increase is driven primarily by an increase in employment, while earnings rise for new entrants but decline for incumbent workers. This decline is primarily present among white-collar, older, and higher-paid workers, highlighting the importance of vintage-specific human capital. Last, we find positive spillovers of both types of innovation at the industry level, benefiting other workers in the same industry who are not directly exposed to these innovations.