AbstractModeling automation as factor-augmenting technological change has 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 plausible predictions. In contrast to factor-augmenting technological change, the automation of tasks always reduces the labor share and can reduce the equilibrium wage (for realistic parameter values). This approach to automation underscores the role of new tasks, changes in the comparative advantage of labor, the possibility that machines become more productive in automated tasks, and the elasticity of substitution and capital accumulation in the adjustment of the economy.
CitationAcemoglu, Daron, and Pascual Restrepo. 2018. "Modeling Automation." AEA Papers and Proceedings, 108: 48-53. DOI: 10.1257/pandp.20181020
- D33 Factor Income Distribution
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 Wage Level and Structure; Wage Differentials
- O33 Technological Change: Choices and Consequences; Diffusion Processes