Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/191611 
Year of Publication: 
2019
Series/Report no.: 
GLO Discussion Paper No. 308
Publisher: 
Global Labor Organization (GLO), Maastricht
Abstract: 
Will low-skilled workers be replaced by automation? To answer this question, we set up a search and matching model that features two skill types of workers and includes automation capital as an additional production factor. Automation capital is a perfect substitute for low-skilled workers and an imperfect substitute for high-skilled workers. Using this type of model, we show that the accumulation of automation capital decreases the labor market tightness in the low-skilled labor market and increases the labor market tightness in the high-skilled labor market. This leads to a rising unemployment rate and falling wages of low-skilled workers and a falling unemployment rate and rising wages of high-skilled workers. In a cali- bration to German data, we show that one additional industrial robot causes a loss of 1.66 low-skilled manufacturing jobs, whereas the additional robot creates 3.42 high-skilled manufacturing jobs. Thus, overall employment even rises with automation.
Subjects: 
unemployment
automation
job search
technological progress
inequality
skill premium
JEL: 
C78
J63
J64
O33
Document Type: 
Working Paper

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