Automation, Skill and Job Creation

This paper explores heterogeneous effects of automation technologies on employment rate across regions from different income groups, and investigates mechanisms through proportion of skilled workers. Automation, measured by both robotic penetration and ICT trade volumes, is 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. Leveraging shift-share IV strategies and generalised model specifications, further evidence supports 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. Such technical changes are more pronounced for manufacturing sectors