Exposure to Occupational and Industry-Level Risks of Offshoring and Automation, and Redistribution Preferences in 23 European Countries

The question whether individuals more exposed to risk of job loss demand more redistribution has gained wide attention in political economy. We aim to contribute, first, by taking into account the occupational risk of job loss due to automation. Technological progress which benefits the high-skilled whilst routine-intense jobs in the bottom and particularly middle of the wage distribution disappear, is widely considered to be a main driver of earnings inequality. Second, we use more detailed indicators for risk of automation and offshoring. Third, we examine whether these associations vary depending on educational level and actual exposure to imports and technological progress at the industry level.

Using information from ESS for 23 European countries between 2002-2012 we find decreasing employment shares of occupations particularly at risk of automation and offshoring. Yet, preliminary results using ordered probit models indicate that only risk to automation translates into higher redistribution preferences. Still, high-paid and high-skilled individuals in offshorable occupations demand less redistribution than their low-paid or low-skilled counterparts. The association between offshorability and demand for redistribution becomes more positive for individuals working in sectors more exposed to imports. Interestingly, high-skilled and high-paid individuals prefer more redistribution when they are working in routine occupations, regardless if they are working in sectors exposed to technological change or not. These findings indicate that risk to automation is analytically and empirically distinct from risk to offshoring, and that exposure to technological progress offers a potential cross-class alliance between high and low-skilled individuals in support of redistribution.