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Immiserizing Automation

Author

Listed:
  • Asriyan, Vladimir
  • Reichardt, Hugo
  • Shelegia, Sandro

Abstract

Early-career jobs often serve as stepping stones to more productive occupations later in life. Automating such jobs may disrupt skill accumulation. We study this possibility in an overlapping-generations economy with career ladders. Our main result is that automation of junior tasks can be immiserizing: when its cost savings are small, automation lowers long-run output. Immiseration occurs because junior automation shifts earnings to later in life. This shift lowers the present value of experience-intensive careers, so that fewer workers pursue them, and the supply of experienced workers falls. As the transition to the new steady state is Pareto efficient, any policy that averts immiseration hurts at least some workers. Incumbent experienced workers, for instance, benefit from higher senior wages without having suffered lower wages as juniors. In the context of U.S. robot automation, we provide empirical support for the theory's key predictions and explore its aggregate implications.

Suggested Citation

  • Asriyan, Vladimir & Reichardt, Hugo & Shelegia, Sandro, 2026. "Immiserizing Automation," CEPR Discussion Papers 21872, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:21872
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    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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