Looking ahead at the effects of automation in an economy with matching frictions

Luís Guimarães and Pedro Gil

Journal of Economic Dynamics and Control, 2022, vol. 144, issue C

Abstract: We look at how advances in AI and Robotics will affect employment in an economy with matching frictions and endogenous job destruction. In the model, tasks can be produced by workers or by machines. Workers have a comparative advantage in producing advanced tasks but machines tend to catch up with labor, leading to automation. To calibrate the model, we rely on predictions in the literature about the expected share of automated jobs due to AI and Robotics. Our model suggests that these technological innovations will raise job destruction but also job creation because the prospect of automating jobs increases the value of hiring workers. Therefore, long-run employment might fall but not massively. Furthermore, employment will likely rise if consumers value human interactions (human touch) as the relative price of labor tasks increases with widespread usage of machines. Regarding policy, we compare the outcomes of a robot tax with alternative policies.

Keywords: Automation; Employment; Labor-market frictions; Technology choice (search for similar items in EconPapers)
JEL-codes: E24 J64 L11 O33 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Working Paper: Looking ahead at the effects of automation in an economy with matching frictions (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:144:y:2022:i:c:s0165188922002421

DOI: 10.1016/j.jedc.2022.104538

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