Can displaced workers have a fresh start?

Abstract

This study considers low‐ability workers with the difference in their specialization areas and investigates the consequence of automation. There are two findings. First, owing to automation, it is more difficult for displaced workers than for other workers to find a new job, because these displaced workers lose their suitable jobs. Consequently, the unemployment rate increases with an increase in the number of displaced workers. Second, unless an additional increase in unsuitable jobs is large under the introduction of new tasks, automation does not necessarily increase the unemployment rate because it is less difficult for workers to find a new job.