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Automation, globalization and vanishing jobs: a labor market sorting view

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  • Faia, Ester
  • Laffitte, Sebastien
  • Mayer, Maximilian
  • Ottaviano, Gianmarco I. P.

Abstract

We show, theoretically and empirically, that the effects of technological change associated with automation and offshoring on the labor market can substantially deviate from standard neoclassical conclusions when search frictions hinder efficient assortative matching between firms with heterogeneous tasks and workers with heterogeneous skills. Our key hypothesis is that better matches enjoy a comparative advantage in exploiting automation and a comparative disadvantage in exploiting offshoring. It implies that automation (offshoring) may reduce (raise) employment by lengthening (shortening) unemployment duration due to higher (lower) match selectivity. We find empirical support for this implication in a dataset covering 92 occupations and 16 sectors in 13 European countries from 1995 to 2010.

Suggested Citation

  • Faia, Ester & Laffitte, Sebastien & Mayer, Maximilian & Ottaviano, Gianmarco I. P., 2020. "Automation, globalization and vanishing jobs: a labor market sorting view," LSE Research Online Documents on Economics 108458, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:108458
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    Cited by:

    1. Faia, Ester & Ottaviano, Gianmarco & Spinella, Saverio, 2022. "Robot Adoption, Worker-Firm Sorting and Wage Inequality: Evidence from Administrative Panel Data," CEPR Discussion Papers 17451, C.E.P.R. Discussion Papers.
    2. Schmidpeter, Bernhard & Winter-Ebmer, Rudolf, 2021. "Automation, unemployment, and the role of labor market training," European Economic Review, Elsevier, vol. 137(C).

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    More about this item

    Keywords

    automation; offshoring; two-sided heterogeneity; positive assortativity; wage inequality; horizontal specialization; core-task-biased technological change;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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