 On the role of automation in an epidemicShaofeng Xu, Tao Liu and Fengliang Liu Journal of Economic Dynamics and Control, 2024, vol. 160, issue C Abstract: This paper examines aggregate and distributional implications of automation in an epidemic. Using industry-level and firm-level data from the Chinese manufacturing sector, we document that the COVID-19 pandemic has led to a significant surge in the installation of industrial robots, and during the health crisis firms with more aggressive robot adoption experienced less severe revenue losses and a more pronounced increase in the wage gap between high-skilled and low-skilled workers. We then develop a tractable SIS-based macroeconomic model to explain these observations. The model economy has two steady states, and an outbreak can trigger a regime-switching transition from a disease-free steady state to an epidemic steady state. Accelerated robot adoption in the transition, stemming from labor shortfall and wage inflation, alleviates the loss in output but affects low-skilled labor disproportionately. These results are robust in an extended setting, where workers have an option to work remotely. Keywords: Epidemic; COVID-19; Automation; SIS model; Skill premium; Remote work (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:160:y:2024:i:c:s0165188924000186 DOI: 10.1016/j.jedc.2024.104826 Access Statistics for this article Journal of Economic Dynamics and Control is currently edited by J. Bullard, C. Chiarella, H. Dawid, C. H. Hommes, P. Klein and C. Otrok More articles in Journal of Economic Dynamics and Control from Elsevier |
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