Working Paper: NBER ID: w22918
Authors: Guido Matias Cortes; Nir Jaimovich; Henry E. Siu
Abstract: We study the deterioration of employment in middle-wage, routine occupations in the United States in the last 35 years. The decline is primarily driven by changes in the propensity to work in routine jobs for individuals from a small set of demographic groups. These same groups account for a substantial fraction of both the increase in non-employment and employment in low-wage, non-routine manual occupations observed during the same time period. We analyze a general neoclassical model of the labor market featuring endogenous participation and occupation choice. We show that in response to an increase in automation technology, the model embodies an important tradeoff between reallocating employment across occupations and reallocation of workers towards non-employment. Quantitatively, we find that advances in automation technology on their own account for a relatively small portion of the joint decline in routine employment and associated rise in non-routine manual employment and non-employment.
Keywords: routine jobs; automation; labor market; employment; demographics
JEL Codes: E0; J0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Advances in automation technology (O31) | Workers leave routine occupations (J29) |
| Workers leave routine occupations (J29) | Sort into nonemployment (J69) |
| Workers leave routine occupations (J29) | Sort into nonroutine manual jobs (L23) |
| Advances in automation technology (O31) | Changes in propensity to work in routine jobs (J29) |
| Changes in propensity to work in routine jobs (J29) | Changes in nonemployment (J69) |
| Changes in propensity to work in routine jobs (J29) | Changes in nonroutine manual employment (J29) |
| Decline in routine employment (J63) | Decrease in propensity of young and prime-aged men with low levels of education to work in routine manual jobs (J29) |
| Decline in routine employment (J63) | Decrease in propensity of young and prime-aged women with intermediate levels of education to work in routine cognitive jobs (J29) |
| Changes in propensities of key demographic groups (J11) | Changes in nonemployment (J69) |
| Changes in propensities of key demographic groups (J11) | Reallocation of labor to low-wage occupations (F66) |