The Race between Man and Machine: Implications of Technology for Growth, Factor Shares, and Employment
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 techno...
| Main Authors: | , |
|---|---|
| Other Authors: | |
| Format: | Article |
| Language: | English |
| Published: |
American Economic Association
2020
|
| Online Access: | https://hdl.handle.net/1721.1/128856 |
| _version_ | 1811074814115315712 |
|---|---|
| author | Acemoglu, K. Daron Restrepo, Pascual |
| author2 | Massachusetts Institute of Technology. Department of Economics |
| author_facet | Massachusetts Institute of Technology. Department of Economics Acemoglu, K. Daron Restrepo, Pascual |
| author_sort | Acemoglu, K. Daron |
| collection | MIT |
| description | 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 toward 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 the introduction of new tasks, and characterize the conditions under which inequality stabilizes in the long run. |
| first_indexed | 2024-09-23T09:55:55Z |
| format | Article |
| id | mit-1721.1/128856 |
| institution | Massachusetts Institute of Technology |
| language | English |
| last_indexed | 2024-09-23T09:55:55Z |
| publishDate | 2020 |
| publisher | American Economic Association |
| record_format | dspace |
| spelling | mit-1721.1/1288562022-09-30T17:49:32Z The Race between Man and Machine: Implications of Technology for Growth, Factor Shares, and Employment Acemoglu, K. Daron Restrepo, Pascual Massachusetts Institute of Technology. Department of Economics 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 toward 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 the introduction of new tasks, and characterize the conditions under which inequality stabilizes in the long run. 2020-12-18T15:44:52Z 2020-12-18T15:44:52Z 2018-06 2019-10-18T15:41:08Z Article http://purl.org/eprint/type/JournalArticle 1944-7981 https://hdl.handle.net/1721.1/128856 Acemoglu, Daron and Pascual Restrepo, "The Race between Man and Machine: Implications of Technology for Growth, Factor Shares, and Employment." American Economic Review 108, 6 (June 2018): 1488-1542 doi. 10.1257/aer.20160696 ©2018 Authors en https://dx.doi.org/10.1257/AER.20160696 American Economic Review Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use. application/pdf American Economic Association American Economic Association |
| spellingShingle | Acemoglu, K. Daron Restrepo, Pascual The Race between Man and Machine: Implications of Technology for Growth, Factor Shares, and Employment |
| title | The Race between Man and Machine: Implications of Technology for Growth, Factor Shares, and Employment |
| title_full | The Race between Man and Machine: Implications of Technology for Growth, Factor Shares, and Employment |
| title_fullStr | The Race between Man and Machine: Implications of Technology for Growth, Factor Shares, and Employment |
| title_full_unstemmed | The Race between Man and Machine: Implications of Technology for Growth, Factor Shares, and Employment |
| title_short | The Race between Man and Machine: Implications of Technology for Growth, Factor Shares, and Employment |
| title_sort | race between man and machine implications of technology for growth factor shares and employment |
| url | https://hdl.handle.net/1721.1/128856 |
| work_keys_str_mv | AT acemoglukdaron theracebetweenmanandmachineimplicationsoftechnologyforgrowthfactorsharesandemployment AT restrepopascual theracebetweenmanandmachineimplicationsoftechnologyforgrowthfactorsharesandemployment AT acemoglukdaron racebetweenmanandmachineimplicationsoftechnologyforgrowthfactorsharesandemployment AT restrepopascual racebetweenmanandmachineimplicationsoftechnologyforgrowthfactorsharesandemployment |