Difficulties in finding middle-skilled jobs under increased automation

Abstract

This study investigates the labor market under increased automation of middle-skilled jobs wherein worker suitability for these jobs is considered. We examine two effects of increased automation on workers. The first effect is the possibility of replacement of middle-skilled workers by machines. The second effect is the diversity in job mismatch probabilities of workers. If machines perform a worker’s suitable jobs more (or less) than the worker’s unsuitable jobs, then the worker’s job mismatch probability rises (or declines). Because workers who have larger job mismatch probabilities remain job seekers, it is more difficult for a firm to find a suitable worker. Due to these two effects, underemployment rises.

Can displaced workers have a fresh start?

“…However, given the assumption that workers have a sufficient number of suitable tasks, there is no difference between mismatched and displaced workers, which implies no aggregate effect of automation on employment in the period of automation. 1 Our study differs in three important ways from Nakamura (2023). The first difference is the difference in the effect of automation on job mismatch possibilities between mismatched and displaced workers.…”

“…Cords and Prettner (2022) and Guimaraes and Gil (2022a), (2022b) investigated how automation affects workers' employment with matching friction. Acemoglu and Restrepo (2018), Hémous and Olsen (2022), and Nakamura and Zeira (2023) examined the feedback mechanisms between automation and the creation of new labour tasks.…”

“…To enhance our understanding, it is helpful to compare our work to that of Nakamura (2023), who examines the labour market under automation of middle-skilled jobs considering worker suitability for these jobs. The study showed that the IMPs of workers who possessed the same ability were heterogeneous owing to automation.…”