Automation Risk, Innovative Capital, and Labour Market Outcomes: Evidence from Japan

Kyoji Fukao, Kenta Ikeuchi, Yoshiaki Nagaya, Cristiano Perugini and Fabrizio Pompei

No 2026-03, CEI Working Paper Series from Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University

Abstract: This study provides an empirical assessment of the relationship between automation risk and labour market performance. To this aim, we use as a key original information the Automation Risk Index (ARI), a new dataset that quantifies the exposure of Japanese occupations and industries to artificial intelligence and robotic technologies at a highly disaggregated level. Our findings indicate that a higher intensity of innovative capital—including ICT infrastructure, AI technologies, and robotics—is associated with lower employment and wage levels. At the same time, these adverse effects are considerably attenuated in industries where occupations face a lower risk of automation, with the mitigating impact being particularly evident for highly educated, male, and younger workers. Overall, the evidence points to the importance of both reduced automation exposure and complementarities between workers' skills and advanced technologies in sustaining workers' bargaining position and limiting the negative labour market consequences of technological change.

Keywords: AI and Robotics; Automation Risk; ICT Capital; Labour Market (search for similar items in EconPapers)
JEL-codes: J23 J24 J31 O33 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2026-06
New Economics Papers: this item is included in nep-ict, nep-lma and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:hit:hitcei:2026-03

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