Just Relocated? Robots, Displacement and Job Quality

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On 5th May, City-REDI held a webinar featuring Prof Vicente Royuela and Dr Liliana Cuccu from University of Barcelona.

Though productivity-enhancing technologies are vital to raising national income and reducing poverty, they also cause a problem of technological unemployment as many of the tasks performed by workers are now being automated. There have been ongoing debates about the impact of robots and automation on net employment.

Most empirical studies view the impact of new technologies through the lens of job creation or job destruction and claim that human labour is not destroyed but rather reallocated. However, less is known about the effect of robot exposure on displaced workers. Prof. Vicente Royuela and Dr. Liliana Cuccu propose an alternative perspective to understand the reallocation process triggered by the introduction of robots. They shift the attention from aggregate employment to workers’ level point of view and focus on displaced workers.

Using a longitudinal administrative panel covering a large sample of Spanish workers from 2001-to 2017, this study attempts to answer: 1) Do automation-exposed displaced workers get reallocated to lower quality jobs? and 2) Is reallocation to a different sector or local labour market an effective adjustment mechanism?

The analysis suggests a long-lasting negative impactive for middle- and low-skilled in terms of earning and employment stability. High-skilled workers are less negatively affected by exposure, although they also incur penalties when changing to a different sector.

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