Low-Skill and High-Skill Automation

32 Pages Posted: 7 Dec 2017

See all articles by Daron Acemoglu

Daron Acemoglu

Massachusetts Institute of Technology (MIT) - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Pascual Restrepo

Boston University - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: December 4, 2017

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.

Keywords: automation, factor prices, labor, skills, tasks, wage inequality

JEL Classification: J23, J24

Suggested Citation

Acemoglu, Daron and Restrepo, Pascual, Low-Skill and High-Skill Automation (December 4, 2017). MIT Department of Economics Working Paper No. 17-12. Available at SSRN: https://ssrn.com/abstract=3083552 or http://dx.doi.org/10.2139/ssrn.3083552

Daron Acemoglu (Contact Author)

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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Centre for Economic Policy Research (CEPR)

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National Bureau of Economic Research (NBER)

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Pascual Restrepo

Boston University - Department of Economics ( email )

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