Automation, job polarisation, and structural change

Luca Fierro, Alessandro Caiani () and Alberto Russo
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Alessandro Caiani: University School for Advanced Studies, Pavia, Italy

No 2021/09, Working Papers from Economics Department, Universitat Jaume I, Castellón (Spain)

Abstract: The increasing automation of tasks traditionally performed by labor is reshaping the relationship between skills and tasks of workers, unevenly affecting labor demand for low, middle, and high-skill occupations. To investigate the economy-wide response to automation, we designed a multisector Agent-Based Macroeconomic model accounting for workers’ heterogeneity in skills and tasks. The model features endogenous skill- biased technical change, and heterogeneous consumption preferences for goods and personal services across workers of different skill types. Following available empirical evidence, we model automation as a manufacture-specific, productivity-enhancing, and skill-biased technological process. We show how automation can trigger a structural change process from manufactory to personal services, which eventually polarises the labor market. Finally, we study how labor market policies can feedback in the model dynamics. In our framework, a minimum wage policy (i) slows down the structural change process, (ii) boosts aggregate productivity, and (iii) accelerates the automation process, strengthening productivity growth within the manufactory sector.

Keywords: agent-based model; automation; structural change; wage polarization; minimum wage (search for similar items in EconPapers)
JEL-codes: C63 E64 L16 (search for similar items in EconPapers)
Pages: 67 pages
Date: 2021
New Economics Papers: this item is included in nep-hme, nep-lab, nep-mac, nep-ore and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Journal Article: Automation, Job Polarisation, and Structural Change (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:jau:wpaper:2021/09

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