How local labour market skill relatedness and size moderate the impacts of automation

This paper examines how local labour market skill relatedness and size moderate the impacts of automation on occupations across Swedish local labour markets. Using administrative data and a spatially explicit risk of automation measure that accounts for regional differences in occupational task contents, it finds a negative association between automation and employment growth and wage income growth for non-metropolitan occupations between 2011 and 2021. Skill relatedness and labour market size mitigate these negative relationships. In contrast, no negative associations are found for metropolitan occupations. Due to their higher shares of non-automatable tasks, they are more resilient to adverse automation effects.