Modeling Automation

13 Pages Posted: 16 Feb 2018

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: February 4, 2018

Abstract

This paper points out that modeling automation as factor-augmenting technological change has several unappealing implications. Instead, modeling it as the process of machines replacing tasks previously performed by labor is both descriptively realistic and leads to distinct and empirically plausible predictions. In contrast to factor-augmenting technological change, the substitution of machines for labor in additional tasks always reduces the labor share in national income and can reduce the equilibrium wage (for realistic parameter values). This approach to automation also enables a discussion of several new forces at work, including the introduction of new tasks, changes in the comparative advantage of labor relative to capital, the deepening of automation (whereby machines be-come more productive in tasks that are already automated), and the role of the elasticity of substitution and capital accumulation in the long-run adjustment of the economy.

Keywords: Automation, factor-augmenting technology, labor demand, labor share, wage, tasks, technology.

JEL Classification: J23, J24.

Suggested Citation

Acemoglu, Daron and Restrepo, Pascual, Modeling Automation (February 4, 2018). MIT Department of Economics Working Paper No. 18-02. Available at SSRN: https://ssrn.com/abstract=3123798 or http://dx.doi.org/10.2139/ssrn.3123798

Daron Acemoglu (Contact Author)

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

50 Memorial Drive
Room E52-380b
Cambridge, MA 02142
United States
617-253-1927 (Phone)
617-253-1330 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Pascual Restrepo

Boston University - Department of Economics ( email )

Register to save articles to
your library

Register

Paper statistics

Downloads
313
rank
85,160
Abstract Views
968
PlumX