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Robots in a Small Open Economy

Stéphane Auray and Aurélien Eyquem

No 2018-17, Working Papers from Center for Research in Economics and Statistics

Abstract: In this paper, we build a small open-economy model la Ghironi & Melitz (2005) with endogenously produced and traded varieties and automation to analyze the effects of a slow-moving, permanent automation shock. Our results are threefold: (i) in the long run a permanent automation shock effectively produces a displacement effect that increases wage inequality between routine and non-routine workers, as well as a fall (increase) in the demand of firms for routine (non-routine) labor, (ii) the relative impact on routine and non-routine labor eventually depends on the relative size of labor supply elasticities, (iii) the external effects of an automation shock remain limited at best.

Keywords: Robots; Automation; Employment; Open-economy (search for similar items in EconPapers)
JEL-codes: E32 E52 F41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac
Date: 2018-10-01
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