Intergenerational mobility in industry 4.0

• Main Author: Sy, Dominique Hannah A.
• Format: text
• Language: English
• Published: Animo Repository 2022
• Subjects: Intergenerational relations—Economic aspects; Technological innovations; Industry 4.0; Working class families; Economics
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/5969; https://animorepository.dlsu.edu.ph/context/etd_masteral/article/13057/viewcontent/Sy_Dominique_Hannah_Ang_edited.pdf
• Institution: De La Salle University

How are intergenerational transmissions affected by the rapid technological developments wrought by the 4th Industrial Revolution? In the era of automation, traditional models of parental investments need to evolve to account for the displacement effect of technological progress. To analyze the impacts of technology on parental investments, the author proposes an extended model that marries the traditional intergenerational mobility framework with a task-based metric, where skilled-biased technological change is measured through the automation susceptibility of the individual. Through simulations of this novel model, the author demonstrates that technological change leads to adjustments in households that increase the likelihood of the offspring to adapt to future disruptions. The theoretical exercises illustrate that skill-biased technological change increases intergenerational mobility, however the odds of unskilled households remain below the optimum. These theoretical findings are empirically validated using the Philippine Labor Force Survey data over the period of 2003-2018. To measure an individual’s level of skill, author extends the literature by using a novel task-based metric with natural language processing to estimate automation probability across occupations. The interplay among technological change, parental investments, and automation probability are analyzed using survey design-consistent estimations that account for attenuation and transitory effects. The results appear to show a positive and significant effect of technological change on skills transmission. Moreover, the skills premium from resilience to automation appears to be positive and significant. The paper then discusses relevant policy implications that are applicable in the post-COVID market landscape.