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Accounting for Automation and Offshoring in International Macroeconomic and Employment Dynamics

Federico Mandelman ()

No 546, 2017 Meeting Papers from Society for Economic Dynamics

Abstract: Employment in middle-skill occupations witnessed an outright decline in the US during the last three decades. Middle-skill workers specialize in routine labor tasks which are prone to be automated. In addition, these occupations do not usually require on-site interactions and thus may be offshored overseas. High-skill workers instead execute non-routine cognitive tasks while the low-skilled specialize in on-site service occupations that cannot be automated. Motivated by this evidence, I develop a stochastic growth model of international trade in tasks with the possibility of automation to account for the role of offshoring and computerization in the decline of middle-skill employment. A system based estimation approach which uses disaggregated employment data, trade-weighted international macroeconomic indicators, as well as, alternative proxies for automation and offshoring costs is implemented.

Date: 2017
New Economics Papers: this item is included in nep-dge and nep-int
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More papers in 2017 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
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