Working Paper: NBER ID: w31910
Authors: Pascual Restrepo
Abstract: This article reviews the literature on automation and its impact on labor markets, wages, factor shares, and productivity. I first introduce the task model and explain why this framework offers a compelling way to think about recent labor market trends and the effects of automation technologies. The task model clarifies that automation technologies operate by substituting capital for labor in a widening range of tasks. This substitution reduces costs, creating a positive productivity effect, but also reduces employment opportunities for workers displaced from automated tasks, creating a negative displacement effect. I survey the empirical literature and conclude that there is wide qualitative support for the implications of task models and the displacement effects of automation. I conclude by discussing shortcomings of the existing literature and avenues for future research.
Keywords: Automation; Labor Markets; Wages; Productivity
JEL Codes: E24; J20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| automation technologies (O33) | productivity effect (O49) |
| automation technologies (O33) | displacement effect (F16) |
| automation technologies (O33) | decrease in labor share in adopting firms (J29) |
| adopting firms (G34) | reduction in labor shares (E25) |
| automation adoption (O31) | shifts in workforce composition (J21) |
| automation (L23) | negative impacts on employment (F66) |