This paper investigates whether "trade policy uncertainty" (TPU), even absent changes in actual policy, may have an adverse effect on foreign direct investment. The paper focuses on the case of Mexico, where we observe a plausibly sharp and exogenous increase in TPU vis-à-vis a large trading partner beginning in the second half of 2016. To test this hypothesis, we use data from Google Trends to construct a TPU index and argue that this index adequately captures both time series and cross-sectional variation in TPU across states in Mexico. We exploit this variation to identify the effect of increased uncertainty on FDI flows. We find that the increase in TPU was associated with a negative effect on FDI inflows, with the effect being driven by the negative impact that TPU had on FDI in export oriented states.
Based on the methodology proposed by Frey and Osborne (2017), we use their estimates for the probability of automation of occupations together with household survey data on the occupational distribution of employment to provide a risk assessment for the threat that automation may pose to the Mexican labor market. We find that almost two thirds of total employment is at high risk of automation; slightly more than half if we only consider employment in the formal sector. We argue that, while these estimates provide a useful benchmark to start thinking about the impact that automation may have on the labor market, they should be interpreted with care as they are solely based on the technical feasibility to automate and do not reflect the economic incentives, or other factors such as the accumulation of human capital through education, to adopt automation technologies.
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