Strengthening Social Protection to Pave the Way for Technological Innovation: Evidence from the U.S.

IMF Working Papers, May 3, 2024

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Canonical URL: Strengthening Social Protection to Pave the Way for Technological Innovation: Evidence from the U.S.

Research focus: Investigates the impact of automation on the U.S. labor market from 2000 to 2007 and whether more generous social protection programs can mitigate negative effects.
Approach referenced: Follows Acemoglu and Restrepo (2020) methodology in assessing robot adoption effects.
Central policy question: Can more generous unemployment insurance (UI) alleviate negative labor-market effects of automation?

Areas with higher robot adoption experienced reductions in employment and wages.
Adverse effects were particularly pronounced for workers without collegue degree.
Differences in social protection generosity across states were exploited to identify mitigation effects.
Areas with more generous unemployment insurance (UI) alleviated the negative effects on wages, especially for less-skilled workers.
The results suggest that UI allowed displaced workers to find better matches The findings emphasize the importance of robust social protection policies in addressing the challenges posed by automation, contributing valuable insights for policymakers.

Strengthen unemployment insurance (UI) generosity to mitigate wage declines associated with automation.
Design social protection policies with attention to distributional impacts, targeting support to less-skilled workers disproportionately affected by robot adoption.
Consider social protection as complementary to policies promoting technological innovation to ease labor-market transitions.

Subjects: Economic sectors; Employment; Expenditure; Financial crises; Labor; Labor markets; Robotics; Technology; Unemployment benefits; Wages
Keywords: Automation; Employment; employment polarization; Europe; Gen-AI; IMF working paper 24/95; Innovation; job searching; Labor Market; labor market program; Labor markets; protection policy; Robotics; Social Assistance; Social Protection; Social Safety Nets; Unemployment benefits; Unemployment Insurance; wage measure; Wages