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Robot arithmetic: can new technology harm all workers or the average worker?

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  • Francesco Caselli
  • Alan Manning

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.

Suggested Citation

  • Francesco Caselli & Alan Manning, 2017. "Robot arithmetic: can new technology harm all workers or the average worker?," CEP Discussion Papers dp1497, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp1497
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    Cited by:

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    2. Fierro, Luca Eduardo & Caiani, Alessandro & Russo, Alberto, 2022. "Automation, Job Polarisation, and Structural Change," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 499-535.
    3. Annie Tubadji & Toby Denney & Don J. Webber, 2021. "Cultural relativity in consumers' rates of adoption of artificial intelligence," Economic Inquiry, Western Economic Association International, vol. 59(3), pages 1234-1251, July.

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    More about this item

    Keywords

    technology; wages;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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