Does Automatization in Rich Countries hurt Developing Ones? Evidence from the US and Mexico

Erhan Artuc, Luc Christiaensen and Hernan Winkler

No 30834024, Jobs Group Papers, Notes, and Guides from The World Bank

Abstract: Following a couple of decades of offshoring, the fear today is of reshoring. Using administrative data on Mexican exports by municipality, sector and destination from 2004 to 2014, this paper investigates how local labor markets in Mexico that are more exposed to automation in the U.S. through trade fared in exports and employment outcomes. The results show that an increase of one robot per thousand workers in the U.S. — about twice the increase observed between 2004-2014 — lowers growth in exports per worker from Mexico to the U.S. by 6.7 percent. Higher exposure to U.S. automation did not affect wage employment, nor manufacturing wage employment overall. Yet, the latter is the result of two counteracting forces. Exposure to U.S. automation reduced manufacturing wage employment in areas where occupations were initially more susceptible to being automated; but exposure increased manufacturing wage employment in other areas. Finally, the analysis also finds negative impacts of exposure to local automation on local labor market outcomes.

Keywords: labor market impact; labor market indicator; local labor market; share of export; working age population; number of workers; labor market outcome; share of employment; impacts on employment; increased import competition; composition of employment; large metropolitan areas; production and export; share of wage; demand for worker; exposure to investments; adoption of ict; share of import; skilled labor force; trade and employment; high school graduate; economies of scale; tradable sector; automotive sector; comparative advantage; total employment; wage employment; estimate impact; trade partner; manufacturing jobs; instrumental variable; positive impact; export drive; high share; export growth; empirical evidence; consumption good; raw material; capital good; Labor migration; anecdotal evidence; weighting scheme; trade pattern; manufacturing wage; point estimate; empirical literature; employment growth; robustness check; exclusion restriction; informal sector; manufacturing sector; econometric model; total wage; external shock; production process; day laborer; family worker; economic sector; regional economy; oecd countries; investment pattern; foreign providers; home country; home countries; export share; literature review; export sector; emerging economy; domestic demand; unskilled worker; Learning and Innovation Credit; logistics cost; foreign supplier; employment impact; high-tech sector; econometric result; worker type; tax authorities; trade shock; world market; depreciation rate; demographic characteristic; market penetration; municipality level; data sample; technological frontier; tax authority; drive system; percent change; informal worker; unpaid worker; import category; manual occupations; local trade; basic metal; trading partner; substantial variation; instrument exposure; labor-intensive industry; net export; gravity model; policy shock; digital manufacturing; labor productivity; Emerging economies; trade datum; initial value; small municipality; weighted average; manufacturing industry; domestic industry; economic integration; car industry; trade variables; Trade Impact; trade links; total trade; worker increase; employment declines; employment trend; negative relationship; export data; employment outcome; intermediate input; employment rate; complementary good; theoretical model; open access; textile industry; industrial revolution; development policy; economic history; media outlet; average share; administrative datum; positive spillover; local area; monthly wage; technology frontier; unskilled job; upward pressure; job displacement; displaced worker (search for similar items in EconPapers)
Pages: 54
Date: 2019-02-14
References: Add references at CitEc
Citations: View citations in EconPapers (23)

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