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Robot Arithmetic: Can New Technology Harm All Workers or the Average Worker?

Francesco Caselli and Alan Manning ()

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: It is well-established that new technology can cause large changes in relative wages and inequality. But there are also claims, based largely on verbal expositions, that new technology will harm workers on average or even all workers. Using formal models (which impose logical consistency and clear links between assumptions and conclusions) we show - under plausible assumptions - that new technology will cause average wages to rise if the prices of investment goods fall relative to consumer goods (a condition supported by the data) and if the new technologies do not lead to a fall in market competition. Some groups of workers must gain but others may be harmed. However, if workers can freely choose their occupation, or redistribution among workers is possible, all workers can gain.

Keywords: technology; wages (search for similar items in EconPapers)
JEL-codes: J31 O33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ltv
Date: 2017-09
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