Automation and New Tasks: How Technology Displaces and Reinstates Labor

Daron Acemoglu and Pascual Restrepo

No 12293, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We present a framework for understanding the effects of automation and other types of technological changes on labor demand, and use it to interpret changes in US employment over the recent past. At the center of our framework is the allocation of tasks to capital and labor – the task content of production. Automation, which enables capital to replace labor in tasks it was previously engaged in, shifts the task content of production against labor because of a displacement effect. As a result, automation always reduces the labor share in value added and may reduce labor demand even as it raises productivity. The effects of automation are counterbalanced by the creation of new tasks in which labor has a comparative advantage. The introduction of new tasks changes the task content of production in favor of labor because of a reinstatement effect, and always raises the labor share and labor demand. We show how the role of changes in the task content of production – due to automation and new tasks – can be inferred from industry-level data. Our empirical decomposition suggests that the slower growth of employment over the last three decades is accounted for by an acceleration in the displacement effect, especially in manufacturing, a weaker reinstatement effect, and slower growth of productivity than in previous decades.

Keywords: tasks; reinstatement effect; productivity; inequality; labor demand; displacement effect; automation; technology; wages (search for similar items in EconPapers)
JEL-codes: J23 J24 (search for similar items in EconPapers)
Pages: 68 pages
Date: 2019-04
New Economics Papers: this item is included in nep-gro, nep-ict, nep-lma, nep-ltv, nep-pay and nep-tid
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Citations: View citations in EconPapers (599)

Published - published in: Journal of Economic Perspectives, 2019, 33 (2), 3 - 30

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Journal Article: Automation and New Tasks: How Technology Displaces and Reinstates Labor (2019)
Working Paper: Automation and New Tasks: How Technology Displaces and Reinstates Labor (2019)
Working Paper: Automation and New Tasks: How Technology Displaces and Reinstates Labor (2019)
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