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Low-Skill and High-Skill Automation

Author

Listed:
  • Daron Acemoglu
  • Pascual Restrepo
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.

Suggested Citation

  • Daron Acemoglu & Pascual Restrepo, 2017. "Low-Skill and High-Skill Automation," NBER Working Papers 24119, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:24119
    Note: LS
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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