Hollowing out of opportunity: Automation technology and intergenerational mobility in the United States

Abstract

Recent automation technology has lead to job polarization in the U.S. labour 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 provide suggestive evidence that automation technology has contributed to the decline of upward mobility of children from poor and middle-class families. 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.