Can Pandemic-Induced Job Uncertainty Stimulate Automation?

Sylvain Leduc and Zheng Liu

No 2020-19, Working Paper Series from Federal Reserve Bank of San Francisco

Abstract: The COVID-19 pandemic has raised concerns about the future of work. The pandemic may become recurrent, necessitating repeated adoptions of social distancing measures (voluntary or mandatory), creating substantial uncertainty about worker productivity. But robots are not susceptible to the virus. Thus, pandemic-induced job uncertainty may boost the incentive for automation. However, elevated uncertainty also reduces aggregate demand and reduces the value of new investment in automation. We assess the importance of automation in driving business cycle dynamics following an increase in job uncertainty in a quantitative New Keynesian DSGE framework. We find that, all else being equal, job uncertainty does stimulate automation, and increased automation helps mitigate the negative impact of uncertainty on aggregate demand.

Keywords: Uncertainty; pandemic; robots; automation; productivity; unemployment; business cycles; monetary policy (search for similar items in EconPapers)
JEL-codes: E24 E32 O33 (search for similar items in EconPapers)
Pages: 52
Date: 2020-05-07
New Economics Papers: this item is included in nep-dge and nep-mac
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Citations: View citations in EconPapers (3)

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DOI: 10.24148/wp2020-19

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