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Does Automation Technology increase Wage?

Author

Listed:
  • Ryosuke Shimizu

    (Assistant Professor, College of Economics, Aoyama Gakuin University)

  • Shohei Momoda

    (Policy Research Institute, Ministry of Finance, Japan)

Abstract

This paper examines the relationship between automation technology diffusion and the wage. In this model, producers either choose automation or non-automation technology, whichever is more profitable. Further, when the producers introduce automation technology, they must pay fixed costs, which differ between industries. The main results of this paper indicate that the improving the productivity of automation technology promotes automation diffusion, decreases labor share, and also decreases the wage when the level of automation technology diffusion is sufficiently high.

Suggested Citation

  • Ryosuke Shimizu & Shohei Momoda, 2021. "Does Automation Technology increase Wage?," Discussion papers ron343, Policy Research Institute, Ministry of Finance Japan.
    • Handle: RePEc:mof:wpaper:ron343
    as

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    File URL: https://www.mof.go.jp/pri/research/discussion_paper/ron343.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    automation; the wage; labor share decline; technology choice;
    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
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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