On the Welfare Implications of Automation
47 Pages Posted: 4 May 2014 Last revised: 17 Sep 2016
Date Written: September 9, 2016
We study the effects of information and communication technologies (ICT) on the distribution of income across factors of production in the United States. Since the 1950s, the income share of ICT saw a seven-fold increase, while it has remained trendless for other types of capital. In parallel, we document substantial reallocation of labor income from occupations relatively substitutable with ICT (routine) to ones relatively complementary (non-routine). In a general equilibrium model that matches these trends, automation accounts for half of the decline in the labor share and for 27% of growth in output per person since 1990.
Keywords: labor share, capital share, job polarization, ICT
JEL Classification: E25, E22, J24, J31, O33
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