Working Paper: NBER ID: w22252
Authors: Daron Acemoglu; Pascual Restrepo
Abstract: We examine the concerns that new technologies will render labor redundant in a framework in which tasks previously performed by labor can be automated and new versions of existing tasks, in which labor has a comparative advantage, can be created. In a static version where capital is fixed and technology is exogenous, automation reduces employment and the labor share, and may even reduce wages, while the creation of new tasks has the opposite effects. Our full model endogenizes capital accumulation and the direction of research towards automation and the creation of new tasks. If the long-run rental rate of capital relative to the wage is sufficiently low, the long-run equilibrium involves automation of all tasks. Otherwise, there exists a stable balanced growth path in which the two types of innovations go hand-in-hand. Stability is a consequence of the fact that automation reduces the cost of producing using labor, and thus discourages further automation and encourages the creation of new tasks. In an extension with heterogeneous skills, we show that inequality increases during transitions driven both by faster automation and introduction of new tasks, and characterize the conditions under which inequality is increasing or stable in the long run.
Keywords: Automation; New Tasks; Labor Share; Employment; Wages
JEL Codes: J23; J24; O14; O31; O33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Automation (L23) | Decrease in employment (J63) |
| Automation (L23) | Decrease in labor share (E25) |
| Automation (L23) | Potential wage reductions (J31) |
| New tasks (Y80) | Increase in employment (J23) |
| New tasks (Y80) | Increase in wages (J31) |
| Decrease in labor share (E25) | Increase in inequality (D31) |
| New tasks (Y80) | Counterbalance effect on labor share (J39) |
| Share of new job titles (J62) | Employment growth (J23) |