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On the welfare implications of automation

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  • Eden,Maya
  • Gaggl,Paul

Abstract

This paper establishes that the rise in the income share of information and communication technology accounts for half of the decline in labor income share in the United States. This decline can be decomposed into a sharp decline in the income share of ?routine? labor?which is relatively more prone to automation?and a milder rise in the non-routine share. Quantitatively, this decomposition suggests large effects of information and communication technology on the income distribution within labor, but only moderate effects on the distribution of income between capital and labor. A production structure calibrated to match these trends suggests modest aggregate welfare gains from automation.

Suggested Citation

  • Eden,Maya & Gaggl,Paul, 2015. "On the welfare implications of automation," Policy Research Working Paper Series 7487, The World Bank.
  • Handle: RePEc:wbk:wbrwps:7487
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    Cited by:

    1. Prettner, Klaus & Strulik, Holger, 2017. "The lost race against the machine: Automation, education and inequality in an R&D-based growth model," Hohenheim Discussion Papers in Business, Economics and Social Sciences 08-2017, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    2. Matthias Kehrig & Nicolas Vincent, 2017. "Growing Productivity without Growing Wages: The Micro-Level Anatomy of the Aggregate Labor Share Decline," CESifo Working Paper Series 6454, CESifo Group Munich.
    3. repec:eee:jmacro:v:52:y:2017:i:c:p:23-38 is not listed on IDEAS
    4. repec:eee:moneco:v:91:y:2017:i:c:p:69-87 is not listed on IDEAS
    5. Cortes, Guido Matias & Jaimovich, Nir & Siu, Henry E., 2017. "Disappearing routine jobs: Who, how, and why?," Journal of Monetary Economics, Elsevier, vol. 91(C), pages 69-87.

    More about this item

    Keywords

    E-Business; Economic Theory&Research; Emerging Markets; Labor Policies; Investment and Investment Climate;

    JEL classification:

    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • 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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