NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Many developed countries have experienced job polarization as occupations that require skills in the middle of the distribution have been replaced by new technologies. This column reports evidence on the relationship between automation and employment in Latin America, analyzing data on five million workers in the six largest economies of the region over two decades. Among the findings is an indication that low-skilled, low-paid women workers who perform routine tasks are particularly vulnerable to automation. Investments in training and education are an essential policy response.

Technological change is one of the main engines of economic growth and social progress. But big changes in technology are also profoundly disruptive, at least in the short run, and may require policy responses to ease the transition.

In recent decades, a new concern has arisen: advances in digital technology and robotics are likely to replace routine tasks that follow well-defined rules, easily automated based on rule-based algorithms. This concern has been examined by the task-based approach to analysis of the workplace: the main idea here is that complementarity or substitutability between technology and labor depends on how susceptible different tasks are to automation.

Photo courtesy of Fundación Capital.