The Labor Market Incidence of New Technologies
Fuente:
arXiv
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| Format: | Preprint |
| Veröffentlicht: |
2025
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| _version_ | 1866915590549012480 |
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| author | Fan, Tianyu |
| author_facet | Fan, Tianyu |
| contents | This paper develops a new framework to analyze the incidence of labor market shocks, focusing on automation and artificial intelligence. Central to our theory is the distance-dependent elasticity of substitution (DIDES), where worker mobility between occupations declines with their distance in skill space. Mapping 306 occupations into cognitive, manual, and interpersonal skill dimensions, we estimate a low-dimensional latent skill model that preserves granular substitution patterns. We show that both automation and artificial intelligence cluster within skill-adjacent occupations, constraining employment adjustment and amplifying wage effects. The clustering nature of technologies generates unequal outcomes: 20--50% of labor demand shocks translate to wages (versus 30% under standard models), while mobility recovers only 20\% of losses (versus 30% from standard estimates). |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2504_04047 |
| institution | arXiv |
| publishDate | 2025 |
| record_format | arxiv |
| spellingShingle | The Labor Market Incidence of New Technologies Fan, Tianyu General Economics Economics This paper develops a new framework to analyze the incidence of labor market shocks, focusing on automation and artificial intelligence. Central to our theory is the distance-dependent elasticity of substitution (DIDES), where worker mobility between occupations declines with their distance in skill space. Mapping 306 occupations into cognitive, manual, and interpersonal skill dimensions, we estimate a low-dimensional latent skill model that preserves granular substitution patterns. We show that both automation and artificial intelligence cluster within skill-adjacent occupations, constraining employment adjustment and amplifying wage effects. The clustering nature of technologies generates unequal outcomes: 20--50% of labor demand shocks translate to wages (versus 30% under standard models), while mobility recovers only 20\% of losses (versus 30% from standard estimates). |
| title | The Labor Market Incidence of New Technologies |
| topic | General Economics Economics |
| url | https://arxiv.org/abs/2504.04047 |