Hollowing Out of Opportunity: Automation Technology and Intergenerational Mobility in the United States (Job Market Paper)
Recent automation technology has lead to job polarization by skill requirements in the U.S. labor market since 1980. Middle-skill jobs, which provide decent wages for relatively uneducated people, have been shrinking in terms of employment share, pushing those workers into low-wage service jobs. In this paper, by exploiting spatial variation in the exposure to technological substitution, I show that automation technology has considerably reduced the upward mobility of children from poor and middle-class families and increased their downward mobility. As an example, holding other things equal, children living in areas with the exposure at 75th percentile are 1.24% less likely to move from the bottom quintile to the top quintile than the children in areas with the exposure at 25th percentile, compared with the national average probability 7.5%. I also find that automation technology has made the distribution of opportunity more polarized. My analysis suggests that middle-skill jobs are an indispensable channel for disadvantaged children to move upward. In addition, this paper provides a plausible explanation for the puzzling observation that relative mobility has stayed constant in the U.S. during recent decades, despite the rapidly increasing income inequality.