Automation, globalisation and relative wages: An empirical analysis of winners and losers

Abstract

In this paper, we study the effects of advances in robotics, tangible and intangible technologies, and trade openness and global value chain participation on relative wages, relying upon the skill-biased technical change and polarisation of the labour force frameworks. The empirical analysis is carried out using a panel dataset comprising 18 mostly advanced European economies and 6 industries, with annual observations spanning the period 2008-2017. Our findings suggest that intangible technologies - especially software & databases - significantly increase the wage premium for high relative to lower-skilled labour. Additionally, the tangible component of ICT primarily benefits lower-skilled workers, whereas R&D and trade openness produce polarising effects. The results are robust to the inclusion of sector-specific labour market regulations variables in the models.