American Economic Journal:
Economic Policy
ISSN 1945-7731 (Print) | ISSN 1945-774X (Online)
Routine-Biased Technological Change and Endogenous Skill Investments
American Economic Journal: Economic Policy
(pp. 236–80)
Abstract
We investigate how individuals alter their educational investments in response to routine-biased technology. We find that individuals growing up in robot-impacted areas are more likely to complete a bachelor's degree and experience a relative increase in earnings. Changes in the skill premium and opportunity cost appear to drive these effects. To interpret these findings, we estimate a model of endogenous skill acquisition where changes in the demand and supply of skills shape the path of earnings. Counterfactual simulations suggest that the endogenous skill response cannot fully undo the adverse earnings effects of automation unless there are sufficiently generous educational subsidies.Citation
Branco, Danyelle, Bladimir Carrillo, and Wilman Iglesias. 2025. "Routine-Biased Technological Change and Endogenous Skill Investments." American Economic Journal: Economic Policy 17 (3): 236–80. DOI: 10.1257/pol.20220407Additional Materials
JEL Classification
- I26 Returns to Education
- J22 Time Allocation and Labor Supply
- J23 Labor Demand
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 Wage Level and Structure; Wage Differentials