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Racing With or Against the Machine? Evidence from Europe

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  • Terry Gregory
  • Anna Salomons
  • Ulrich Zierahn

Abstract

A fast-growing literature shows that digital technologies are displacing labor from routine tasks, raising concerns that labor is racing against the machine. We develop a task-based framework to estimate the aggregate labor demand and employment effects of routine-replacing technological change (RRTC), along with the underlying mechanisms. We show that while RRTC has indeed had strong displacement effects in the European Union between 1999 and 2010, it has simultaneously created new jobs through increased product demand, outweighing displacement effects and resulting in net employment growth. However, we also show that this finding depends on the distribution of gains from technological progress.

Suggested Citation

  • Terry Gregory & Anna Salomons & Ulrich Zierahn, 2018. "Racing With or Against the Machine? Evidence from Europe," CESifo Working Paper Series 7247, CESifo.
    • Handle: RePEc:ces:ceswps:_7247
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    More about this item

    Keywords

    labor demand; employment; routine-replacing technological change; tasks; local demand spillovers;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • 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
    • 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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