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Explaining the Labor Share: Automation Vs Labor Market Institutions

Luís Guimarães and Pedro Gil ()

Labour Economics, 2022, vol. 75, issue C

Abstract: We propose a simple model to assess the evolution of the US labor share and how automation affects employment. In our model, heterogeneous firms may choose a manual technology and hire a worker subject to matching frictions. Alternatively, they may choose an automated technology and produce using only machines (robots). Our model suggests that automation reduces the labor share but increases employment and wages. Furthermore, our model suggests that labor market institutions are unlikely to have played a major role in the fall of the US labor share after 1987. Instead, technological factors are a more promising candidate.

Keywords: Automation; Labor share; Technology choice; Employment; Matching frictions (search for similar items in EconPapers)
JEL-codes: E24 J64 L11 O33 (search for similar items in EconPapers)
Date: 2022
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Related works:
Working Paper: Explaining the labor share: automation vs labor market institutions (2019) Downloads
Working Paper: Explaining the labor share: automation vs labor market institutions (2019) Downloads
Working Paper: Explaining the labor share: automation vs labor market institutions (2019) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:labeco:v:75:y:2022:i:c:s0927537122000392

DOI: 10.1016/j.labeco.2022.102146

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