Automation and Jobs: When Technology Boosts Employment
45 Pages Posted: 18 Mar 2017 Last revised: 29 Nov 2017
Date Written: November 28, 2017
Do industries shed jobs when they adopt new labor-saving technologies? Sometimes productivity-enhancing technology increases industry employment instead. In manufacturing, jobs grew along with productivity for a century or more; only later did productivity gains bring declining employment. What changed? Markets became saturated. While the literature on structural change provides reasons for the decline in the manufacturing share of employment, few papers can explain both the rise and subsequent fall. Using two centuries of data, a simple model of demand accurately explains the rise and fall of employment in the US textile, steel, and automotive industries. The model also predicts that computer technology should generate relatively greater job growth in nonmanufacturing industries today. Estimates show computer use is associated with declining employment in manufacturing industries, but not in other sectors.
Keywords: Automation, technical change, sectoral growth, labor demand, manufacturing, computer technology, deindustrialization
JEL Classification: J2, O3, N10
Suggested Citation: Suggested Citation