On the Welfare Implications of Automation

47 Pages Posted: 4 May 2014 Last revised: 17 Sep 2016

See all articles by Maya Eden

Maya Eden

World Bank - Development Research Group (DECRG)

Paul Gaggl

University of North Carolina at Charlotte, Belk College of Business, Department of Economics

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Date Written: September 9, 2016

Abstract

We study the effects of information and communication technologies (ICT) on the distribution of income across factors of production in the United States. Since the 1950s, the income share of ICT saw a seven-fold increase, while it has remained trendless for other types of capital. In parallel, we document substantial reallocation of labor income from occupations relatively substitutable with ICT (routine) to ones relatively complementary (non-routine). In a general equilibrium model that matches these trends, automation accounts for half of the decline in the labor share and for 27% of growth in output per person since 1990.

Keywords: labor share, capital share, job polarization, ICT

JEL Classification: E25, E22, J24, J31, O33

Suggested Citation

Eden, Maya and Gaggl, Paul, On the Welfare Implications of Automation (September 9, 2016). Available at SSRN: https://ssrn.com/abstract=2432313 or http://dx.doi.org/10.2139/ssrn.2432313

Maya Eden

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

Paul Gaggl (Contact Author)

University of North Carolina at Charlotte, Belk College of Business, Department of Economics ( email )

9201 University City Blvd
Charlotte, NC 28223
United States

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