Working Paper: NBER ID: w24119
Authors: Daron Acemoglu; Pascual Restrepo
Abstract: We present a task-based model in which high- and low-skill workers compete against machines in the production of tasks. Low-skill (high-skill) automation corresponds to tasks performed by low-skill (high-skill) labor being taken over by capital. Automation displaces the type of labor it directly affects, depressing its wage. Through ripple effects, automation also affects the real wage of other workers. Counteracting these forces, automation creates a positive productivity effect, pushing up the price of all factors. Because capital adjusts to keep the interest rate constant, the productivity effect dominates in the long run. Finally, low-skill (high-skill) automation increases (reduces) wage inequality.
Keywords: Automation; Labor Markets; Wages; Inequality
JEL Codes: J23; J24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| low-skill automation (L23) | low-skill labor displacement (F66) |
| low-skill labor displacement (F66) | decline in low-skill wages (F66) |
| high-skill automation (L63) | high-skill labor displacement (F66) |
| high-skill labor displacement (F66) | potential decline in low-skill wages (F66) |
| automation (L23) | wage inequality (J31) |
| high-skill automation (L63) | productivity effect (O49) |
| productivity effect (O49) | increase in wages for all workers (J38) |
| automation (L23) | increase in total wage bill in the long run (J39) |
| automation (L23) | negative impact on directly affected labor type wages (F66) |