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Automation-Skill Complementarity: The Changing Returns To Soft Skills In Different Stages Of Technology Adoption

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  • Anastasiia Pustovalova
  • Priit Vahter

Abstract

This paper explores the complementarity of automation with social and problem-solving skills, focusing on the wage effects. The results based on detailed firm- and individual-level data from Estonia show that in manufacturing firms which recently adopted automation tools, there is additional wage premium for employees’ social skills. This effect is even more pronounced for the low-skilled workers, emphasizing both the importance of soft skills on low-wage jobs and how innovation at firms can have significant positive effects on some sub-groups of the low-skilled. The role of skills is different depending on how persistent the automation investments are at the firm. First-time automating firms start valuing the social skills first, while persistently automating firms reward the problem-solving skills instead.

Suggested Citation

  • Anastasiia Pustovalova & Priit Vahter, 2024. "Automation-Skill Complementarity: The Changing Returns To Soft Skills In Different Stages Of Technology Adoption," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 146, Faculty of Economics and Business Administration, University of Tartu (Estonia).
    • Handle: RePEc:mtk:febawb:146
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    Keywords

    automation; technological change; social skills; problem-solving skills; wage differentials;
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