Higher-skilled workers more likely to leave when firms automate
The probability of workers leaving their company increases when there was a spike in automation investments, and some more more likely to leave than others.
While automation may not create the same amount of widespread pain as mass layoffs in a downturn, some workers are more impacted than others when their companies automate processes, according to the research paper, “Automatic Reaction – What Happens To Workers At Firms That Automate?”
Researchers headed by Boston University’s James Bessen examined 2000-2016 data on Netherlands workers, and found that the probability of workers leaving their company increased when there was a spike in automation investments – but not in droves as predicted by some “alarmists.”
Cumulatively after five years, 8.5 percent of “incumbent workers” will have left, compared to the 7.2 percent of “recent hires” who will have separated from their employer (the researchers could not determine from the data whether these workers quit or were fired).
Related: Automation comes for Amazon’s white-collar workers
Recent hires tend to move on to new jobs “quite seamlessly,” while incumbent workers take longer to find new employment, possibly due to “having accumulated more (firm-specific) human capital which is depreciating in the face of automation,” the authors write.
“Older workers generally bear more of the cost of automation-driven displacement: they either experience longer non-employment durations or enter early retirement (as is the case for incumbents), or have higher firm separation probabilities and lower daily wages (as is the case for recent hires),” the authors write.
Higher-skilled workers are also more apt to leave due to automation, but they tend to find jobs more quickly than lower-skilled workers, according to the research.
“The burden that automation places on workers is less than the burden created by mass layoffs and plant closings that arise from things like declining demand or bankruptcies,” Bessen writes in a Boston University blog. “Nevertheless, the burden placed on affected workers is substantial, and existing safety net programs are not providing these workers much economic security.”
Bessen concedes that the impact of automation might worsen in the future and further research should determine how workers would be affected.
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