On the Welfare Implications of Automation

47 Pages Posted: 20 Apr 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: November 12, 2015

Abstract

This paper establishes that the rise in the income share of information and communication technology accounts for half of the decline in labor income share in the United States. This decline can be decomposed into a sharp decline in the income share of ?routine? labor?which is relatively more prone to automation?and a milder rise in the non-routine share. Quantitatively, this decomposition suggests large effects of information and communication technology on the income distribution within labor, but only moderate effects on the distribution of income between capital and labor. A production structure calibrated to match these trends suggests modest aggregate welfare gains from automation.

Keywords: Employment and Shared Growth, Information Technology, Achieving Shared Growth, Economic Theory & Research, Industrial Economics, Pro-Poor Growth, Equity and Development, Economic Growth

Suggested Citation

Eden, Maya and Gaggl, Paul, On the Welfare Implications of Automation (November 12, 2015). World Bank Policy Research Working Paper No. 7487, Available at SSRN: https://ssrn.com/abstract=2690016

Maya Eden (Contact Author)

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

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

Paul Gaggl

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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