Racing With and Against the Machine: Changes in Occupational Skill Composition in an Era of Rapid Technological Advance

Abstract

Rapid advances in digital technologies have profound implications for work. Many middle and low skill jobs have disappeared, contributing to increasing inequality, falling labor force participation and stagnating median incomes. We examine changes in the skill content of jobs from 2006-2014 using comprehensive data on occupational skill requirements of 674 occupations to understand the effects of recent changes in automation. We identify seven distinct skill categories empirically and explain over 62% of the variation in the data. Consistent with theory, we find a significant reduction in skills that compete with machines, an increase in skills that complement machines, and an increase in skills where machines (thus far) have not made great in-roads. Complementarity across skills has increased, boosting the need for worker flexibility. The remarkable scale and scope of occupational skill changes that we document just since 2006 portend even bigger changes in coming years.