New Technologies, Automation, and Labor Markets

Abstract

This paper demonstrates the causal effect of new technologies on the U.S. labor market. I employ information and communications technology, and robot penetration, as two proxy for new technologies to assess the effect of automation on 795 occupations across 450 industries between 2004 and 2016. New technologies reduce the annual growth rate of occupation at risk of automation by 1.8–2.8% relative to risk-less occupations. I demonstrate causality using the differential effect of technology capital, instrumented by E.U. capital, on occupations with different risks of automation. Sector-year dummies control for Chinese and Mexican imports, the Great Recession, and conventional capital. Trade evidence reassures my results.