SUMMARY We study how various types of machines, namely, information and communication technologies, software and especially industrial robots, affect the demand for workers of different education, age and gender. We do so by exploiting differences in the composition of workers across countries, industries and time. Our data set comprises 10 high-income countries and 30 industries, which span roughly their entire economies, with annual observations over the period 1982–2005. The results suggest that software and robots reduced the demand for low- and medium-skill workers, the young and women – especially in manufacturing industries; but raised the demand for high-skill workers, older workers and men – especially in service industries. These findings are consistent with the hypothesis that automation technologies, contrary to other types of capital, replace humans performing routine tasks. We also find evidence for some types of workers, especially women, having shifted away from such tasks.

This paper investigates the relationship between trade openness and the size of governments, both theoretically and empirically. We argue that openness can increase the size of governments through two channels: (1) a terms of trade externality, whereby trade lowers the domestic cost of taxation, and (2) the demand for insurance, whereby trade raises risk and public transfers. We provide a uni…ed framework for studying and testing these two mechanisms. Our main theoretical prediction is that the relative strength of the two explanations depends on a key parameter, namely, the elasticity of substitution between domestic and foreign goods. Moreover, while the …rst mechanism is ine¢ cient from the standpoint of world welfare, the second is instead optimal. In the empirical part of the paper, we provide new evidence on the positive association between openness and government size and we explore its determinants. Consistently with the terms of trade externality channel, we show that the correlation is contingent on a low elasticity of substitution between domestic and foreign goods. Our …ndings raise warnings that globalization may have led to ine¢ ciently large governments.JEL Classi…cation: F1, H1