The Impact of Automation on Employment: Just the Usual Structural Change?

TLDR

The study examines the projected impact of automation on employment over the next decade at macro and sectoral levels and offers policy recommendations to enhance the dynamic efficiency of structural change. The authors combine an evolutionary multisectoral structural change model with labor economics and employ expert employment projections to identify sectors and occupations affected by automation. The framework shows that labor displaced from application sectors is largely absorbed by new labor‑intensive sectors and that macro‑level scenarios indicate a typical structural change rather than an end of work.

Abstract

We study the projected impact of automation on employment in the forthcoming decade, both at the macro-level and in actual (types of) sectors. Hereto, we unite an evolutionary economic model of multisectoral structural change with labor economic theory. We thus get a comprehensive framework of how displacement of labor in sectors of application is compensated by intra- and intersectoral countervailing effects and notably mopped up by newly created, labor-intensive sectors. We use several reputable datasets with expert projections on employment in occupations affected by automation (and notably by the introduction of robotics and AI) to pinpoint which and how sectors and occupations face employment shifts. This reveals how potential job loss due to automation in “applying” sectors is counterbalanced by job creation in “making” sectors as well in complementary and quaternary, spillover sectors. Finally, we study several macro-level scenarios on employment and find that mankind is facing “the usual structural change” rather than the “end of work”. We provide recommendations on policy instruments that enhance the dynamic efficiency of structural change.