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Can Pandemic-Induced Job Uncertainty Stimulate Automation?

Author

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  • Sylvain Leduc
  • Zheng Liu

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.

Suggested Citation

  • Sylvain Leduc & Zheng Liu, 2020. "Can Pandemic-Induced Job Uncertainty Stimulate Automation?," Working Paper Series 2020-19, Federal Reserve Bank of San Francisco.
    • Handle: RePEc:fip:fedfwp:87950
    DOI: 10.24148/wp2020-19
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Can Pandemic-Induced Job Uncertainty Stimulate Automation?
      by Christian Zimmermann in NEP-DGE blog on 2020-05-27 19:07:41

    Citations

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    Cited by:

    1. M. Battisti & M. Del Gatto & A. F. Gravina & C. F. Parmeter, 2021. "Robots versus labor skills: a complementarity/substitutability analysis," Working Paper CRENoS 202104, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    2. Kanzola, Anna-Maria & Papaioannou, Konstantina & Petrakis, Panagiotis E., 2023. "Environmental behavioral perceptions under uncertainty of alternative economic futures," Technological Forecasting and Social Change, Elsevier, vol. 190(C).

    More about this item

    Keywords

    Uncertainty; pandemic; robots; automation; productivity; unemployment; business cycles; monetary policy;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • 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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