Abstract
This thesis is composed of two chapters each studying different aspects of the impact of
technology and international trade on the economy.
Chapter 1 analyses the effects of trade and technology shocks on the internal migration
of workers in the United States between 1990 and 2007. It finds that routine workers
exhibit a lower migration response to rising Chinese import competition than non-routine
workers. This is the case despite the China trade shock triggering disproportionate falls in
routine wages and employment in high-trade exposed regions. It also finds that the shares
of routine in-migrants decline as the automation of routine-tasks displaces routine workers
in technologically advanced regions. Using a spatial equilibrium model, the chapters explains
the regional adjustment process emerging from the disjoint geography of trade and
technology shocks from theoretical standpoint. The migration of routine workers is hampered
by lower equilibrium wages. Less routine workers migrate across regions, and other
labour market outcomes such as unemployment worsen in response to the shock.
Chapter 2 analyses optimal fiscal policy in an economy with two types of capital: physical
capital, and automation capital (“robots”), that is substitutable with labour. If the tax
system is complete, the optimal robot and capital taxes should be set in such a way, so that
the pre-tax returns on automation and physical capital are equalized along the transition
to the zero-distortion steady state. I examine the implications of this result in an economy
with a declining price of automation that matches U.S. data.