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Low-Skill and High-Skill Automation

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  • Daron Acemoglu
  • Pascual Restrepo

Abstract

We present a task-based model in which high- and low-skill workers compete against machines in the production of tasks. Low-skill (high-skill) automation corresponds to tasks performed by low-skill (high-skill) labor being taken over by capital. Automation displaces the type of labor it directly affects, depressing its wage. Through ripple effects, automation also affects the real wage of other workers. Counteracting these forces, automation creates a positive productivity effect, pushing up the price of all factors. Because capital adjusts to keep the interest rate constant, the productivity effect dominates in the long run. Finally, low-skill (high-skill) automation increases (reduces) wage inequality.

Suggested Citation

  • Daron Acemoglu & Pascual Restrepo, 2017. "Low-Skill and High-Skill Automation," NBER Working Papers 24119, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:24119
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    References listed on IDEAS

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    1. Graetz, Georg & Feng, Andy, 2014. "Rise of the Machines: The Effects of Labor-Saving Innovations on Jobs and Wages," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100401, Verein für Socialpolitik / German Economic Association.
    2. David H. Autor & David Dorn, 2013. "The Growth of Low-Skill Service Jobs and the Polarization of the US Labor Market," American Economic Review, American Economic Association, vol. 103(5), pages 1553-1597, August.
    3. Graetz, Georg & Michaels, Guy, 2015. "Robots at Work," CEPR Discussion Papers 10477, C.E.P.R. Discussion Papers.
    4. David H. Autor & Frank Levy & Richard J. Murnane, 2003. "The skill content of recent technological change: an empirical exploration," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.
    5. Gregory, Terry & Salomons, Anna & Zierahn, Ulrich, 2016. "Racing With or Against the Machine? Evidence from Europe," Annual Conference 2016 (Augsburg): Demographic Change 145843, Verein für Socialpolitik / German Economic Association.
    6. Guy Michaels & Ashwini Natraj & John Van Reenen, 2014. "Has ICT Polarized Skill Demand? Evidence from Eleven Countries over Twenty-Five Years," The Review of Economics and Statistics, MIT Press, vol. 96(1), pages 60-77, March.
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    Cited by:

    1. Geiger, Niels & Prettner, Klaus & Schwarzer, Johannes A., 2018. "Automatisierung, Wachstum und Ungleichheit," Hohenheim Discussion Papers in Business, Economics and Social Sciences 13-2018, University of Hohenheim, Faculty of Business, Economics and Social Sciences.

    More about this item

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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