Working Paper: NBER ID: w24321
Authors: Daron Acemoglu; Pascual Restrepo
Abstract: This paper points out that modeling automation as factor-augmenting technological change has several unappealing implications. Instead, modeling it as the process of machines replacing tasks previously performed by labor is both descriptively realistic and leads to distinct and empirically plausible predictions. In contrast to factor-augmenting technological change, the substitution of machines for labor in additional tasks always reduces the labor share in national income and can reduce the equilibrium wage (for realistic parameter values). This approach to automation also enables a discussion of several new forces at work, including the introduction of new tasks, changes in the comparative advantage of labor relative to capital, the deepening of automation (whereby machines become more productive in tasks that are already automated), and the role of the elasticity of substitution and capital accumulation in the long-run adjustment of the economy.
Keywords: Automation; Labor Share; Technological Change
JEL Codes: J23; J24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Automation as task substitution (O31) | Reduced labor share in national income (E25) |
| Automation as task substitution (O31) | Reduced equilibrium wages (J39) |
| Productivity gains from automation (O49) | Offset reduction in equilibrium wages (J39) |
| Capital-augmenting technologies (O49) | Increased labor demand and wages (J39) |
| Elasticity of substitution between capital and labor (D24) | Determines outcomes of labor demand and wages (J29) |
| Expansion of tasks that can be automated (O31) | Reduced labor demand and wages (F66) |
| Deepening automation (L23) | Further impact on labor share and wages (F66) |