Automation, labor markets, and trade

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 new and detailed 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 700 occupations in 250 industries in the US during 2001-2016. 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, our proxy for automation, 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 are low wage sectors and have a lower rate of employment growth during the period 2000-2016. 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.