The Race Between Machine and Man: Implications of Technology for Growth, Factor Shares and Employment

Daron Acemoglu and Pascual Restrepo

No 22252, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We examine the concerns that new technologies will render labor redundant in a framework in which tasks previously performed by labor can be automated and new versions of existing tasks, in which labor has a comparative advantage, can be created. In a static version where capital is fixed and technology is exogenous, automation reduces employment and the labor share, and may even reduce wages, while the creation of new tasks has the opposite effects. Our full model endogenizes capital accumulation and the direction of research towards automation and the creation of new tasks. If the long-run rental rate of capital relative to the wage is sufficiently low, the long-run equilibrium involves automation of all tasks. Otherwise, there exists a stable balanced growth path in which the two types of innovations go hand-in-hand. Stability is a consequence of the fact that automation reduces the cost of producing using labor, and thus discourages further automation and encourages the creation of new tasks. In an extension with heterogeneous skills, we show that inequality increases during transitions driven both by faster automation and introduction of new tasks, and characterize the conditions under which inequality is increasing or stable in the long run.

JEL-codes: J23 J24 O14 O31 O33 (search for similar items in EconPapers)
Date: 2016-05
New Economics Papers: this item is included in nep-lma and nep-ltv
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Citations: View citations in EconPapers (137)

Published as Daron Acemoglu & Pascual Restrepo, 2018. "The Race between Man and Machine: Implications of Technology for Growth, Factor Shares, and Employment," American Economic Review, vol 108(6), pages 1488-1542.

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