Racing with or Against the Machine? Evidence from Europe

62 Pages Posted: 31 Oct 2018

See all articles by Terry Gregory

Terry Gregory

IZA Institute of Labor Economics; ZEW – Leibniz Centre for European Economic Research

Anna Salomons

Utrecht University - School of Economics; KU Leuven - Center for Economic Studies

Ulrich Zierahn

ZEW – Leibniz Centre for European Economic Research - Labour Markets, Human Resources and Social Policy Department

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Date Written: 2018

Abstract

A fast-growing literature shows that digital technologies are displacing labor from routine tasks, raising concerns that labor is racing against the machine. We develop a task-based framework to estimate the aggregate labor demand and employment effects of routine-replacing technological change (RRTC), along with the underlying mechanisms. We show that while RRTC has indeed had strong displacement effects in the European Union between 1999 and 2010, it has simultaneously created new jobs through increased product demand, outweighing displacement effects and resulting in net employment growth. However, we also show that this finding depends on the distribution of gains from technological progress.

Keywords: labor demand, employment, routine-replacing technological change, tasks, local demand spillovers

JEL Classification: E240, J230, J240, O330

Suggested Citation

Gregory, Terry and Salomons, Anna and Zierahn, Ulrich, Racing with or Against the Machine? Evidence from Europe (2018). CESifo Working Paper No. 7247, Available at SSRN: https://ssrn.com/abstract=3275421

Terry Gregory (Contact Author)

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
Mannheim, 68161
Germany

HOME PAGE: http://www.zew.de/en/mitarbeiter/mitarbeiter.php3?action=mita&kurz=TGR

Anna Salomons

Utrecht University - School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, +31 30 253 7373 3584 EC
Netherlands

KU Leuven - Center for Economic Studies ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Ulrich Zierahn

ZEW – Leibniz Centre for European Economic Research - Labour Markets, Human Resources and Social Policy Department ( email )

P.O.Box 10 34 43
D-68034
Germany

HOME PAGE: http://www.zew.de/MA601-1

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