Disappearing routine jobs: Who, how, and why?

Abstract

We study the deterioration of employment in middle-wage, routine occupations in the United States in the last 35 years. The decline is primarily driven by changes in the propen- sity to work in routine jobs for individuals from a small set of demographic groups. These same groups account for a substantial fraction of both the increase in non-employment and employment in low-wage, non-routine manual occupations observed during the same period. We analyze a general neoclassical model of the labor market featuring endogenous participation and occupation choice. In response to an increase in automation technology, the framework embodies a tradeoffbetween reallocating employment across occupations and reallocation of workers towards non-employment. Quantitatively, we find that this standard model accounts for a relatively small portion of the joint decline in routine em- ployment and associated rise in non-routine manual employment and non-employment.