The Macroeconomics of Automation: Data, Theory, and Policy Analysis

67 Pages Posted: 11 Feb 2020 Last revised: 6 May 2020

See all articles by Nir Jaimovich

Nir Jaimovich

University of Zurich

Itay Saporta-Eksten

Tel Aviv University

Yaniv Yedid-Levi

Tiomkin School of Economics, IDC Herzliya

Henry Siu

University of British Columbia (UBC) - Vancouver School of Economics

Multiple version iconThere are 4 versions of this paper

Date Written: January 2020

Abstract

During the last four decades, the U.S. has experienced a fall in the employment in middle-wage, "routine-task-intensive," occupations. We analyze the characteristics of those who used to be employed in such occupations and show that this type of individual is nowadays more likely to be out of the labor force or working in low-paying occupations. Based on these findings, we develop a quantitative, general equilibrium model, with heterogeneous agents, labor force participation, occupational choice, and investment in physical and automation capital. We first use the model to evaluate the distributional consequences of automation. We find heterogeneity in its impact across different occupations, leading to a significant polarization in welfare. We then use this framework as a laboratory to evaluate various public policies such as retraining, and explicitly redistributive policies that transfer resources from those who benefit from automation to those who bear the brunt of its costs. We assess the tradeoffs between the aggregate impact and welfare distributional consequences of such policies.

Keywords: automation, labor force participation, Polarization, Retraining, Routine Employment, Unemployment insurance, universal basic income

Suggested Citation

Jaimovich, Nir and Saporta-Eksten, Itay and yedid-levi, yaniv and Siu, Henry, The Macroeconomics of Automation: Data, Theory, and Policy Analysis (January 2020). CEPR Discussion Paper No. DP14362, Available at SSRN: https://ssrn.com/abstract=3535447

Nir Jaimovich (Contact Author)

University of Zurich ( email )

Itay Saporta-Eksten

Tel Aviv University

Ramat Aviv
Tel-Aviv, 6997801
Israel

Yaniv Yedid-levi

Tiomkin School of Economics, IDC Herzliya ( email )

P.O. Box 167
Herzliya, 46150
Israel

Henry Siu

University of British Columbia (UBC) - Vancouver School of Economics ( email )

6000 Iona Dr
Vancouver, BC V6T 1L4
Canada

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