Job automation risk, economic structure and trade: a European perspective

Neil Foster-McGregor, Önder Nomaler & Bart Verspagen


Recent studies report that technological developments in machine learning and artificial intelligence present a significant risk to jobs in advanced countries. We re-estimate automation risk at the job level, finding sectoral employment structure to be key in determining automation risk at the country level. At the country level, we find a negative relationship between automation risk and labour productivity. We then analyse the role of trade as a factor leading to structural changes and consider the effect of trade on aggregate automation risk by comparing automation risk between a hypothetical autarky and the actual situation. Results indicate that trade increases automation risk in Europe, although moderately so. European countries with high labour productivity see automation risk increase due to trade, with trade between European and non-European nations driving these results. This implies that the high productivity countries do not, on the balance, offshore automation risk, but rather import it.

JEL Classification: F16, F66, O33, J24

Keywords: Automation risk for employment, Industry 4.0, Globalisation, Global Value Chains

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