Struggling Workers in a Changing World: Three Essays on Labour Economics and Political Economy

Abstract

[eng] The question of whether automation will cause mass unemployment has been a pressing concern in recent years. While estimates on the number of automatable occupations vary, the prospect of a substantial share of jobs disappearing in the near future presents a significant challenge to the stability of our societies. In addition to the potential for job destruction, automation can significantly widen the inequality gap between workers belonging to different skill groups. This is because the bulk of employment and wage losses are suffered by middle- and low-skilled workers, while the roles typically covered by the high-skilled are complemented by new technologies, resulting in a rise in demand for their skills and higher wages. This dissertation is composed by three independent studies presenting empirical evidence of how technological advancements can harm workers. Throughout the whole dissertation, particular emphasis is placed on identifying the groups that are most vulnerable to disruptive innovations, as recognizing and addressing the needs of these “losers” is crucial for developing effective policies. The dissertation also highlights how ignoring workers' grievances may have serious implications for society at large, as it can fuel the growth of populist radical-right movements. Chapter 2 challenges the concept of “reallocation” as a solution to displacement caused by automation. Concerns over widespread technological unemployment are often dismissed with the argument that human labour is not destroyed by automation but rather reallocated to other tasks, occupations, or sectors. When focusing on pure employment levels, the idea that workers are not permanently excluded but “just” reallocated might be reassuring. However, while considerable attention has been devoted to the impact of automation on employment levels, little has been said about the quality of new job matches for displaced workers. Using an administrative longitudinal panel covering a large sample of Spanish workers from 2001 to 2017, the study investigates the short- and medium-term re-employment prospects of workers displaced from sectors with an increasing density of industrial robots. Furthermore, the study examines the role of reallocation to other sectors or local labour markets as adjustment mechanisms. The study finds that exposed middle- and low-skilled workers are more likely than non-exposed workers to remain unemployed six months after displacement. Among those who find a new occupation, an additional robot per 1,000 workers increases the probability of being re-employed in a lower-paying job by about 1.9 percentage points for middle- and low-skilled workers, with significantly higher penalties for those who relocate to a different sector. Moreover, these workers tend to face a qualification downgrading in the new job and are more likely to be re-employed through temporary employment agencies. High-skilled workers are less negatively affected by exposure, although they can also incur a penalty when changing sectors. Chapter 3 investigates the relationship between routine-biased technological change (RBTC) and the increase in Involuntary Part-Time (IPT). Specifically, this study examines the effect of local specialization in routine tasks on the increase of involuntary part-time work across 103 provinces in Italy between the years 2004 and 2019. The analysis draws on the combination of the INAPP-ISTAT Survey on Italian Occupations (ICP) with the Italian section of the EU labour force survey to build province-level indicators of routine-task specialisation based on the occupational mix in each province. The econometric analysis employs a partial adjustment model, which is well-suited for investigating the dynamics of labour market variables that exhibit gradual or sluggish adjustment over time. Furthermore, endogeneity concerns are addressed by an IV fixed-effects panel data model with an instrument á-la-Bartik. The study provides evidence that RBTC is correlated with a higher incidence of IPT in Italian local labour markets, indicating that automation's impact goes beyond affecting unemployment rates and can impact job quality in other ways. Although the study confirms the association between RBTC and IPT for both genders, the results suggest that the stronger growth of IPT among women cannot be solely attributed to RBTC. Instead, the analysis described in Chapter 3 indicates that low-skilled women are disproportionately affected by the expansion of employment in “household substitution” services compared to men. This implies that, in addition to RBTC, various other factors such as sector segregation, a surge in household-substitution services demand, and gender norms, may also be playing a role in explaining higher IPT levels among women. Chapter 4 takes a step ahead and examines the potential outcomes that may arise when individuals who consider themselves disadvantaged by the effects of technological advancements and globalisation perceive that their concerns are not adequately being addressed by relevant institutions. Specifically, the study exploits the proliferation of large logistic hubs into mostly rural towns and villages to investigate the relationship between socio-economic grievances and support for the populist radical right. The Italian logistics industry is characterized by a heavy reliance on low-paying and precarious contracts, it employs a large number of foreign workers, and is dominated by multinational corporations. In this, the construction of large logistic hubs can create a favourable environment for populist radical right-wing parties that portray themselves as protectors of traditional values and national identity, and as defenders of the working class against the threats of the modern world. Through an IV and a DiD approach, Chapter 4 provides causal evidence that there is indeed a positive relationship between the socio-economic shock caused by new large logistic hubs and the surge in support for the Lega in Italian municipalities between 2006 and 2018. This relationship might be driven by different mechanisms: increase in the feeling of economic insecurity, a surge in the anti-immigration sentiment, hostility towards foreign multinationals. These channels are investigated through an event study. While the analysis does not provide any strong evidence in support of the first mechanism, is suggests that anti-immigration sentiment may be a potential driver. The findings presented in Chapter 4 call for a more thorough evaluation of the costs and benefits from hosting a logistic hub as for many municipalities the expected benefits might be outweighed by negative effects. Local administrators are lured by the prospect of increased employment, investments, and positive spillover effects. However, once the hub is built, the reality they have to face might be different, paving the way for social discontent, which, among other ways, is expressed through an increase in support for populist radical-right parties. Chapter 4 also emphasizes the potential negative impact on social cohesion when institutions fail to address the concerns of those who feel disadvantaged by the consequences of disruptive innovations.