Racing with or Against the Machine? Evidence from Europe

By Terry Gregory, A. Salomons, Ulrich Zierahn. Social Science Research Network, 2016

225 citations recorded by the source corpus.

A fast-growing literature shows that technological change is replacing labor in routine tasks, raising concerns that labor is racing against the machine. This paper is the first to estimate the labor demand effects of routine-replacing technological change (RRTC) for Europe as a whole and at the level of 238 European regions. We develop and estimate a task framework of regional labor demand in tradable and non-tradable industries, building on Autor & Dorn (2013a) and Goos, Manning and Salomons (2014), and distinguish the main channels through which technological change affects labor demand. These channels include the direct substitution of capital for labor in task production, but also the compensating effects operating through product demand and local demand spillovers. Our results show that RRTC has on net led to positive labor demand effects across 27 European countries over 1999-2010, indicating that labor is racing with the machine. This is not due to limited scope for human-machine substitution, but rather because sizable substitution effects have been overcompensated by product demand and its associated spillovers. However, the size of the product demand spillover -- and therefore also RRTC's total labor demand effect-- depends critically on where the gains from the increased productivity of technological capital accrue.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/d54848f590e812a62b75c59639206ea99a81212f

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In Economics and Econometrics

Citations in the corpus

Exposure of occupations to technologies of the fourth industrial revolution (2021, background): “Also, Gregory et al. (2016) find that computerization in Europe did not reduce employment but increased it.”
Revisiting the risk of automation (2017, background): “Yet, whether this leads to net job losses depends on the relative sizes of job-creation and job-destruction effects (Acemoglu and Restrepo 2017, Gregory et al. 2016).”
The future of skills: employment in 2030 (2017, background): “Gregory et al. (2016) develop a task-based framework, estimating that automation boosted net labour demand across Europe by up to 11.6 million jobs over the period 1990–2010.”
The impact of automation on employment: just the usual structural change? (2018, background): “, but also health care) and thus may increase employment in quaternary sectors [15].”
Benign Effects of Automation: New Evidence from Patent Texts (2018, unknown): “We find a significantly positive effect of automation on total employment, which is in line with Gregory, Salomons, and Zierahn (2016) and Gaggl and Wright (2017) but paints a more positive picture than Autor et al. (2015), Graetz and Michaels (2018), and Acemoglu and Restrepo (2020).”
Tasks, Automation, and the Rise in US Wage Inequality (2021, background): “…the decline of routine occupations and broader changes in occupational structure include, Johnson and Keane (2013), Lee, Tim, and Shin (2017), Gregory, Salomons, and Zierahn (2018), Bárány and Siegel (2020), Jaimovich, Saporta-Eksten, Siu, and Yedid-Levi (2020), Atalay, Phongthiengtham,…”