UNU-MERIT Working Papers Series

Automation and Human Capital Investment

Sidharth Rony #2026-009

Technological change has an ambiguous impact on labour market by creating demand for some skills and reducing demand of some others. Hence the relationship of demand for skills and the need for training is an empirical question. In this paper, I investigate association between types of technological change and decisions. I categorise several measures of automation on the basis of tasks (done at individual or occupation level) and technology (Software, Robot, AI) and compare their relationship with human capital investment. I find that the correlation between automation and training varies depending on the automation measure used, showing a decline with both individual- and occupation-level automation measures. However when relying on technology based measures of automation, workers exposed to older technologies (Robot, Software) receive less training with automation, while workers exposed to newer technologies (AI) receive more training with automation. The findings are consistent across workers of different age groups and skill levels.

Keywords: Automation, Artificial Intelligence, Robotization, On-the-job training, PIAAC, Human Capital Investment

JEL Classification: J23, J24, M53, O33, I26

DOI: https://doi.org/10.53330/XOGM3113

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