Automation, Skill and Job Creation

This paper explores the heterogeneous effects of automation technologies on employment rate with respect to proportion of skilled workers, represented by regions from different income groups. Automation, as measured by both robotic penetration and ICT trade volumes, are replacing US labour force. Exploiting variations across US commuting zones with different income levels, I find insignificant employment response in high income areas, while the magnitudes of employment reductions are more sizeable and significant in low and middle income areas. Further evidence supports the hypothesis that these patterns can be explained by a simple net job creation channel, as displacement effects outweigh productivity effects in low income CZs with lower proportion of skilled labour, and job creations are complementing job destructions in high income CZs with higher skill shares. The results are consistent with cross country analysis