LABTECHNO

• Principal investigators: Calin Arcalean and Ioana Schiopu
• Research group: Group for Research in Economics and Finance (GREF)
• Funding body: MICINN-MCIU

About project

Labor markets around the world have been disrupted by a host of macroeconomic factors, in particular by a rapid pace of technological change. Since labor markets conditions directly affect the livelihoods and welfare of citizens, understanding the implications of technological and structural change becomes all the more relevant, not only from an academic point of view, but more importantly, for guiding policy making towards efficient and equitable responses to these macroeconomic challenges. In this project, we focus on three large sets of problems arising in direct connection to the labor markets.

The first pillar of the project emphasizes the role of labor supply - the quantity and quality of skills available in an economy in understanding the evolution of wage inequality. We plan to connect the evolving structure of the higher education market with incentives to invest in skills, in the context of enrolment expansion driven by fast technological change. We aim to understand recent trends in educational attainments, college premium and wage distributions for unskilled and skilled workers, which have important effects on the growth performance and income inequality.

A second research line considers directly the labor markets. Specifically, we plan to study empirically how the shift towards services feeds into the overall polarization of the labor market the rise in high and low paid jobs at the expense of middle paying ones - in a sample of European economies. Going beyond aggregate trends, we also aim to look at the gender specific patterns of job polarization and study whether the theory of structural change is able to explain the observed polarization patterns across genders.

In our third research line, we plan to look at the broader implications of labor markets re-organization following technological and structural changes. On the one hand, we take a global perspective to understand sectoral employment trends in open economies undergoing the process of structural transformation and the welfare implications of trade-driven differences in (de)industrialization. On the other hand, we look more closely at the consequences of automation and robot adoption on the structure of labor markets. A first project considers the environmental aspects, while a second one analyzes the aggregate effects of adopting labor-substituting technologies on the formation of wages and prices.

Beyond the direct academic interest, we expect our project to generate significant policy implications. Higher education policies are increasingly important in a knowledge-based economy. Similarly, job polarization and associated gender specific evolutions have been receiving a lot of attention lately, in particular since the COVID crisis. Documenting these patterns would help design appropriate policies during the pandemic and the recovery. Better understanding the welfare implications of international trade is relevant for the current ramp up of protectionist and strategic policies. Finally, research on the broad effects on automation will help inform the public debate on the less obvious consequences of technological change, beyond the dichotomous discussion about job destruction/creation.