Automation Threat and Wage Bargaining

I analyze how the possibility of automating jobs impacts wages even in the absence of adoption of the automation technology. Using data from the Current Population Survey and an index of automatability from the literature I show that the threat of automation decreases workers’ wages, that this effect is more pronounced in labor markets where union intensity is higher, and that the return to experience in an occupation is negatively affected by the threat of automation. These results suggest that, even if only a small number of firms automate, automation technologies may still have a large effect on the labor market.

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