Automation Impacts on China's Polarized Job Market

TL;DR

This paper examines how automation impacts large Chinese cities differently based on their industrial development paths, revealing a polarization where some cities are resilient while others are more vulnerable, influenced by government planning and resource allocation.

Contribution

It uncovers the distinct industrial trajectories of Chinese cities and their effects on automation resilience, highlighting the role of government support and resource distribution.

Findings

Large Chinese cities show polarized responses to automation impacts.

Diversified cities exhibit greater resilience to automation.

Specialized cities are more susceptible to automation impacts.

Abstract

When facing threats from automation, a worker residing in a large Chinese city might not be as lucky as a worker in a large U.S. city, depending on the type of large city in which one resides. Empirical studies found that large U.S. cities exhibit resilience to automation impacts because of the increased occupational and skill specialization. However, in this study, we observe polarized responses in large Chinese cities to automation impacts. The polarization might be attributed to the elaborate master planning of the central government, through which cities are assigned with different industrial goals to achieve globally optimal economic success and, thus, a fast-growing economy. By dividing Chinese cities into two groups based on their administrative levels and premium resources allocated by the central government, we find that Chinese cities follow two distinct industrial development trajectories, one trajectory owning government support leads to a diversified industrial structure and, thus, a diversified job market, and the other leads to specialty cities and, thus, a specialized job market. By revisiting the automation impacts on a polarized job market, we observe a Simpson's paradox through which a larger city of a diversified job market results in greater resilience, whereas larger cities of specialized job markets are more susceptible. These findings inform policy makers to deploy appropriate policies to mitigate the polarized automation impacts.