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The evolution of technological substitution in low-wage labor markets

technological substitution
Editor's note:

This paper was prepared for the December 12, 2019, conference on “Automation, Labor Market Institutions, and the Middle Class” for the Brookings Institution, Future of the Middle Class Initiative.

Abstract:

This paper documents how the susceptibility of low-wage occupational employment to technological substitution has changed over the first two decades of the century.  We find that low-wage automation has accelerated and spread to a broader set of jobs since the Financial Crisis – decreasing employment at both cognitively routine and manually routine jobs.  However, we also find that low-wage automation is associated with increases in the demand for jobs requiring interpersonal tasks.  That said, the growth in jobs requiring interpersonal tasks does not appear to be enough – as it was prior to the Financial Crisis – to fully offset the negative effects of automation on low-wage routine jobs. We also show that low-wage automation is occurring at a much higher rate outside of the largest U.S. cities and disproportionately impacts less-educated workers who are young, male, and especially minority.

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