Routine-biased technological change and employee outcomes after mass layoffs: Evidence from Brazil
Antonio Soares Martins Neto, Xavier Cirera & Alex Coad
#2022-014
We investigate the impact of "routinization" on the labor outcomes of
displaced workers. We use a rich Brazilian panel dataset and an
occupation-task mapping to examine the effect of job displacement in
different groups, classified according to their tasks. Our main result
is that following a layoff, workers previously employed in
routine-intensive occupations suffer a more significant decline in wages
and more extended periods of unemployment. As expected, job displacement
has a negative and lasting impact on wages. Still, workers in
routine-intensive occupations are more impacted than those in
non-routine occupations in terms of wages (an increase of one point in
the routineintensity index results in a further decline of 2 percent in
workers' relative wages) and employment. Furthermore, our results
indicate that workers in routine-intensive occupations are more likely
to change occupations after the shock, and those who do not switch
occupational fields suffer a more significant decline in wages. Lastly,
even though the loss of employer-specific wage premiums explains 13
percent of displaced workers' drop in wages, it does not explain
routine-intensive workers' more substantial losses.
JEL Classification: J24, J63, O54
Keywords: Routine intensity, Job displacement, Mass layoffs,
Occupational mobility, Brazil