Career Values for Labor Markets: Evidence from Robot Adoption

Career progression is important for people’s lives and economic decisions. We develop an empirical measure of an occupation’s local “career value”—the long-run value of the earnings that will result from working in that job and following the career ladder associated with it. We then document that career values have been stagnating over the 2000-2016 period, in spite of growing wages, due to a deterioration in career mobility. We estimate the effect of robot automation on career values over the same time period and find that one additional industrial robot per 1,000 workers lowered local career values by about 1.5 percent. The reason is that robotization reduces transitions into better-paid occupations and redirects workers toward similar- or lower-paid jobs. The impact is largest in high-manufacturing areas, for mid-experience workers, and for males. Demotions from management jobs that result from robotization are more likely for less-educated workers and for women, who are more likely to respond by upskilling. Declines in career values led to a reduction in housing construction and college enrollment, and an increase in Republican vote shares in 2016, which highlights how the career effects of automation shape forward-looking household decisions.