Individual Probabilities of Unemployment Under Automation

45 Pages Posted: 25 Oct 2018 Last revised: 21 Jul 2019

Date Written: October 31, 2018

Abstract

This paper develops a model that explores automation and unemployment through job availability. In our model, workers differ in terms of their suitability for tasks. Depending on their task suitability, automation leads to either positive or negative effects on their job matching. Each worker has her own likelihood of unemployment due to job mismatch, represented as her individual probability of
unemployment (IPU). Regarding the distribution of IPUs for workers, the variance depends positively on the level of automation. When technical change including automation progress occurs, job seekers in that period include not only workers who faced job mismatch in the previous period but workers who are replaced by machines. Some of the replaced workers face job mismatch, which increases unemployment. Simultaneously, automation progress decreases the mean of the IPUs for the mismatched workers, which in turn decreases unemployment. The variance of the IPUs is significant in these two opposing effects.

Keywords: Workers’ Suitability for Tasks; Automation; Job Mismatch; Individual Probabilities of Unemployment (IPUs); Rate of Unemployment

JEL Classification: J64; O14; O30

Suggested Citation

Nakamura, Hideki and Nakamura, Masakatsu, Individual Probabilities of Unemployment Under Automation (October 31, 2018). Available at SSRN: https://ssrn.com/abstract=3259091 or http://dx.doi.org/10.2139/ssrn.3259091

Hideki Nakamura (Contact Author)

Osaka City University ( email )

3-3-138, Sugimoto
Sumiyoshi-ku
Osaka 558-8585
Japan

Masakatsu Nakamura

Rissho University ( email )

4-2-16
Osaki
Shinagawa, Tokyo 141-8602
Japan

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