Are Automation and Trade Polarizing Developing Country Labor Markets, Too?

Abstract

The automation and out-sourcing of routine, codifiable tasks are seen as driving polarization in labor markets in high-income countries. This paper first offers several explanations for why developing countries might show differing dynamics, at least for the present. Census data then confirms this, showing on average no evidence of polarization in developing countries. However, incipient polarization in a few countries as well as major drives to automate in some large, labor intensive producers suggests this may not remain the case. This raises concerns first about the impact on equity within those countries, but second the possibility that the traditional flying geese pattern" -- whereby low skilled jobs are progressively off-shored to poorer and poorer countries -- may be short circuited.

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