Automation and Labor Market Outcomes: The Pivotal Role of High-Quality Education

63 Pages Posted: 28 Aug 2018

Date Written: June 14, 2018

Abstract

Automation will be a boon or a catastrophe depending on whom you listen to. This paper proposes an overlapping-generations model with endogenous school choice in which the quality of a country's education system determines how well skill supply can respond to increased demand from automation and subsequently whether automation will be beneficial or detrimental. In this sense, education quality in the model offers a bridge between the optimistic and pessimistic perspectives on automation. In testing the model's assumptions, the paper finds evidence that educational attainment, cognitive skills, and select noncognitive skills are associated with avoiding automation-prone occupations. Consistent with the model's predictions, census data indicate that countries have historically relied most on these types of occupations at middle-income status. The model and empirical findings suggest that it is middle-income countries that are most vulnerable to automation if their education systems are unable to affect cognitive and noncognitive skills sufficiently. As a result, automation may herald a much different growth model for developing countries: one in which developing these skills is central.

Keywords: Educational Sciences, Labor Markets, Education for Development (superceded), Education For All, Educational Populations

Suggested Citation

Bentaouet Kattan, Raja and Patrinos, Harry Anthony, Automation and Labor Market Outcomes: The Pivotal Role of High-Quality Education (June 14, 2018). World Bank Policy Research Working Paper No. 8474, Available at SSRN: https://ssrn.com/abstract=3238308

Raja Bentaouet Kattan (Contact Author)

World Bank

1818 H Street, NW
Washington, DC 20433
United States

Harry Anthony Patrinos

World Bank ( email )

1818 H Street NW
Washington, DC 20433
United States

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