This new paper investigates the effects of routine-biased technological change in South Africa and the unequal effects within the labor market.
After several decades of decreasing wage inequality in labor markets, the late 1970s saw a reversal of this trend as wage gaps between workers of different skill and occupation classes started widening in several countries.
RBTC postulates that technological progress allows the automation of a growing share of routine tasks, which incentiveses firms to replace the middle-skilled workers who perform such “codifiable” tasks with computer-based systems. In contrast, low-skilled and high-skilled workers perform a larger share of non-routine manual or cognitive tasks, both of which are harder to automate, making these workers less dispensable and raising the relative demand for their services.
Several studies have confirmed that the shrinking share of middle-skilled occupations corresponds with a reduced demand for occupations with high routine task intensity (RTI) in developed economies.
What is the case of developing countries? This new document investigates the effects of routine-biased technological change in developing country South Africa and the unequal effects within the labor market contribuing in four main points: