Globalization, automation, and the future of work
Jun 2025
Enabling world-class research
David Dorn explores how globalization and automation have shaped labor markets, revealing the lasting impact of trade shocks, especially in regions exposed to Chinese imports. His research highlights the connection between economic shifts and broader societal issues, such as political polarization and social inequalities.
Pressing challenges to address
- Why do displaced manufacturing workers struggle to find new employment?
- How can declining manufacturing towns achieve an economic turnaround?
- Which government policies help workers and their communities to adjust?
The central role of jobs in people’s lives
Employment is fundamental to economic security and social well-being. Most households derive their primary income from labor, with only a few benefiting from substantial capital income. Beyond financial stability, jobs also shape personal identity and social connections, as people spend a significant portion of their lives in the workplace. However, concerns about job security are rising as artificial intelligence reshapes workplaces and trade wars disrupt the global economy.
Research on labor markets, trade, and automation
My research examines how technological change and international trade influence labor markets and economic opportunities across different groups of workers. A central focus is on how regional economic shocks – such as the decline of locally dominant industries – reshape communities and political landscapes. Manufacturing jobs, in particular, have been heavily impacted in recent decades by automation and the closure of factories due to rising import competition, especially from China.
Evolving views on the labor market impact of trade
Economists have long recognized that international trade generates significant welfare gains by enabling countries to specialize in industries where they have a comparative advantage. However, tradedriven growth is often uneven, with some sectors expanding while others contract. A well-functioning labor market should, in theory, facilitate worker transitions across industries and regions.
Until the early 2010s, many economists believed that the United States, with its flexible labor market and geographically mobile workforce, would smoothly adapt to sectoral shifts caused by globalization. However, research over the past decade has shown that the rapid rise of China as the world’s leading exporter created severe labor market adjustment challenges in the U. S. and Europe. American factories in industries such as apparel, furniture, toys, and consumer electronics struggled to compete with low-cost imports and ultimately shut down.
Contrary to expectations, many displaced workers faced prolonged unemployment, and few relocated in search of new opportunities. This lack of mobility has had significant implications for the distribution of trade’s benefits and costs. While consumers across all regions and income levels enjoy lower prices on imported goods, the burden of job losses has been concentrated among a smaller segment of workers employed in importcompeting industries.
From economic shocks to social and political impacts
Factory closures had dramatic effects on towns whose local economy was heavily dependent on a single industry. In the region of Martinsville in Southern Virginia for instance, half of all jobs were in furniture production in 1990. The massive decline of the U. S. furniture industry over the following two decades left the population of Martinsville with much lower employment and earnings levels than before.
The economic decline in this and other similar regions strained social structures. As predicted by classical economic theories, the loss of stable employment – especially for men – led to declining marriage and cohabitation rates, with more children growing up in single-parent households below the poverty line. These areas also experienced rising crime rates and increased mortality linked to drug and alcohol abuse, illustrating how economic shocks translate into broader social distress. Politically, discontent in deindustrialized regions fueled support for far-right politicians, ultimately contributing to Donald Trump’s electoral success in 2016.
Understanding worker and regional resilience
Why workers struggled so much to adapt to globalization remains a puzzle. Why do lower-income workers stay in declining industries instead of transitioning to new opportunities? Do they lack information about alternative employment, or are skill mismatches the primary obstacle? Further research on these issues can provide valuable insights for designing policies that enhance resilience and economic mobility.
Another critical issue is how economically depressed regions can recover after losing a dominant industry. Some U. S. regions that suffered manufacturing job losses in the 2000s later experienced job growth in service sectors such as healthcare, education, and retail. However, it remains unclear whether this growth has translated into a genuine economic revival for the original workforce in these locations. Another open question is whether younger generations, whose parents lost manufacturing jobs, have been able to establish strong career paths of their own or if economic hardship continues to limit their opportunities.
New global economic trends
One of the most fascinating aspects of studying labor markets and society is how macroeconomic shifts continuously generate new research questions. This is especially evident in international trade, where a decades-long trend toward free trade has reversed, giving way to a surge in tariffs driven largely by the protectionist policies of the Trump administration.
Despite campaigning on promises to “bring back jobs to America,” the tariffs imposed in 2018 and 2019 failed to produce significant employment growth. Nevertheless, voters in regions that benefited from tariff protections became even more likely to support Trump, highlighting the deep and lasting political and economic consequences of trade disruptions.
As the second Trump presidency unfolds, a crucial question remains: Will this administration’s policies lead to more profound de-globalization, and if so, how will these changes reshape labor markets and communities? Ongoing research will be essential in assessing the broader implications of these developments on workers, industries, and regional economies.
The UBS Center: Advancing economics for society
The UBS Center for Economics in Society has been a transformative force in advancing economic research at the University of Zurich (UZH). Since I joined the UBS Center in 2014, shortly after its inception, UZH’s Department of Economics has welcomed 30 additional professors – many of whom would not have been recruited without the Center’s support. As a result, Zurich has emerged as a leading hub for academic research across a wide range of economic disciplines.
Yet, the impact of the UBS Center extends far beyond academia. True to its name – Economics in Society – the research it supports addresses some of the most pressing societal challenges. Faculty affiliated with the Center for instance play a key role in UZH’s large-scale interdisciplinary research priority program on “Equality of Opportunity,” which studies economic and social inequalities and assesses policies that improve opportunities in society.
Beyond research, the UBS Center actively fosters dialogue between academia, policymakers, business leaders, and the wider public. Events such as the Forum for Economic Dialogue, along with the Center’s diverse communication platforms, create a unique and highly valuable space for knowledge exchange. By bridging the gap between cutting-edge research and real-world applications, the UBS Center continues to stimulate the public conversation on economic and social issues.
David Dorn explores how globalization and automation have shaped labor markets, revealing the lasting impact of trade shocks, especially in regions exposed to Chinese imports. His research highlights the connection between economic shifts and broader societal issues, such as political polarization and social inequalities.
Pressing challenges to address
- Why do displaced manufacturing workers struggle to find new employment?
- How can declining manufacturing towns achieve an economic turnaround?
- Which government policies help workers and their communities to adjust?
The central role of jobs in people’s lives
Employment is fundamental to economic security and social well-being. Most households derive their primary income from labor, with only a few benefiting from substantial capital income. Beyond financial stability, jobs also shape personal identity and social connections, as people spend a significant portion of their lives in the workplace. However, concerns about job security are rising as artificial intelligence reshapes workplaces and trade wars disrupt the global economy.
Research on labor markets, trade, and automation
My research examines how technological change and international trade influence labor markets and economic opportunities across different groups of workers. A central focus is on how regional economic shocks – such as the decline of locally dominant industries – reshape communities and political landscapes. Manufacturing jobs, in particular, have been heavily impacted in recent decades by automation and the closure of factories due to rising import competition, especially from China.
David Dorn is the UBS Foundation Professor of Globalization and Labor Markets in the Department of Economics at the University of Zurich.
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Jobs also shape personal identity and social connections, as people spend a significant portion of their lives in the workplace.
Why workers struggled so much to adapt to globalization remains a puzzle.
Economic challenges of our time
From rising inequality and global trade tensions to climate change and the impact of artificial intelligence on labor markets – economists today are grappling with fundamental questions that will shape our collective future. In this special edition of the Public Paper series, all affiliated professors of the UBS Center share their perspectives on these challenges. Their contributions highlight how cutting-edge research conducted at the Department of Economics at the University of Zurich can help us better understand – and potentially solve – some of the most urgent issues of our time.
It is precisely this ambition that defines the UBS Center for Economics in Society. Since its founding, the Center has served as a platform for dialogue between academia, business, and policymakers and as a catalyst for excellence in economic research. That vision goes back to Kaspar Villiger. As the founding Chairman of the Foundation Council, he played a pivotal role in establishing and shaping the UBS Center.
With this fifteenth edition of the Public Paper series, we honor Kaspar Villiger’s extraordinary contributions and legacy. By strengthening research capacity at the University of Zurich and fostering public dialogue around key societal questions, his vision continues to inspire the Center’s mission: bridging knowledge and society to build a better future.
From rising inequality and global trade tensions to climate change and the impact of artificial intelligence on labor markets – economists today are grappling with fundamental questions that will shape our collective future. In this special edition of the Public Paper series, all affiliated professors of the UBS Center share their perspectives on these challenges. Their contributions highlight how cutting-edge research conducted at the Department of Economics at the University of Zurich can help us better understand – and potentially solve – some of the most urgent issues of our time.
It is precisely this ambition that defines the UBS Center for Economics in Society. Since its founding, the Center has served as a platform for dialogue between academia, business, and policymakers and as a catalyst for excellence in economic research. That vision goes back to Kaspar Villiger. As the founding Chairman of the Foundation Council, he played a pivotal role in establishing and shaping the UBS Center.
David Dorn on Google Scholarbrowse
Will I loose my job because of AI?
Author
UBS Foundation Professor of Globalization and Labor Markets, Research Fellow CEPR
David Dorn is the UBS Foundation Professor of Globalization and Labor Markets at the University of Zurich and the director of the university-wide interdisciplinary research priority program “Equality of Opportunity.” He was previously a tenured associate professor at CEMFI in Madrid, a visiting professor at the University of California in Berkeley, and a visiting professor at Harvard University.Professor Dorn’s research spans the fields of labor economics, international trade, economic geography, macroeconomics, and political economy. He published influential studies on the impacts of globalization and technological innovation on labor markets and society. David Dorn is among the 100 most highly cited economists worldwide in the last decade. In 2023, he was awarded the Hermann Heinrich Gossen Prize for the most accomplished economist in German-speaking countries under the age of 45.
UBS Foundation Professor of Globalization and Labor Markets, Research Fellow CEPR
David Dorn is the UBS Foundation Professor of Globalization and Labor Markets at the University of Zurich and the director of the university-wide interdisciplinary research priority program “Equality of Opportunity.” He was previously a tenured associate professor at CEMFI in Madrid, a visiting professor at the University of California in Berkeley, and a visiting professor at Harvard University.Professor Dorn’s research spans the fields of labor economics, international trade, economic geography, macroeconomics, and political economy. He published influential studies on the impacts of globalization and technological innovation on labor markets and society. David Dorn is among the 100 most highly cited economists worldwide in the last decade. In 2023, he was awarded the Hermann Heinrich Gossen Prize for the most accomplished economist in German-speaking countries under the age of 45.