Glowing cities and the future of manufacturing in the US and Europe: How digitalization will impact metropolitan areas depending on sectoral dominances and regional skill distribution

Abstract

ABSTRACT Since digitalization and Industry 4.0 have been recognized as a key issue for future economic development, prosperity and wealth distribution, several studies have emerged on the potential threats of new technology on workforce development. The consensus is that jobs may fall away, while some new jobs will be created, with a different skills profile and a new set of qualifications that are required. This paper examines the effects of three main indicators: the impact of skills, industrial sector dominance and product complexity on workforce reduction. Based on metropolitan data from the US (Census) and Europe (Eurostat), the author develops a metropolitan typology based on industrial sectors in each metro and analyses the systematic relationship between regional variations of automation, local skills and economic sector variations, finding that automation exposure in Europe is significantly lower than in the US and that medium-skilled manufacturing jobs in the US are increasingly threatened and low-skill service jobs remain relatively safe from automation – leading to a decreasing middle class. This also shows how metropolitan areas are at risk of developing polarized effects: some facing economic upturn and continuous prosperity, and a majority of others either stagnant or with extreme downturn and high unemployment rates.