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

Author

Listed:
  • Jaimovich, Nir
  • Saporta-Eksten, Itay
  • Yedid-Levi, Yaniv
  • Siu, Henry
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.

Suggested Citation

  • Jaimovich, Nir & Saporta-Eksten, Itay & Yedid-Levi, Yaniv & Siu, Henry, 2020. "The Macroeconomics of Automation: Data, Theory, and Policy Analysis," CEPR Discussion Papers 14362, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:14362
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    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Arvai Kai & Mann Katja, 2022. "Consumption Inequality in the Digital Age," Working papers 890, Banque de France.
    2. Carl-Christian Groh, 2024. "Big Data and Inequality," CRC TR 224 Discussion Paper Series crctr224_2024_555, University of Bonn and University of Mannheim, Germany.
    3. Luca Fornaro & Martin Wolf, 2021. "Monetary policy in the age of automation," Economics Working Papers 1794, Department of Economics and Business, Universitat Pompeu Fabra, revised Sep 2022.
    4. Dennis C. Hutschenreiter & Tommaso Santini & Eugenia Vella, 2022. "Automation and sectoral reallocation," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 13(1), pages 335-362, May.
    5. E. Mark Curtis & Daniel G. Garrett & Eric C. Ohrn & Kevin A. Roberts & Juan Carlos Suárez Serrato, 2021. "Capital Investment and Labor Demand," NBER Working Papers 29485, National Bureau of Economic Research, Inc.
    6. Philippe Aghion & Céline Antonin & Simon Bunel & Xavier Jaravel, 2022. "Modern manufacturing capital, labor demand, and product market dynamics: Evidence from France," SciencePo Working papers Main hal-03943312, HAL.
    7. Mr. Andrew Berg & Lahcen Bounader & Nikolay Gueorguiev & Hiroaki Miyamoto & Mr. Kenji Moriyama & Ryota Nakatani & Luis-Felipe Zanna, 2021. "For the Benefit of All: Fiscal Policies and Equity-Efficiency Trade-offs in the Age of Automation," IMF Working Papers 2021/187, International Monetary Fund.
    8. Melosi, Leonardo & Faccini, Renato, 2019. "Bad Jobs and Low Inflation," CEPR Discussion Papers 13628, C.E.P.R. Discussion Papers.
    9. Faia, Ester & Kudlyak, Marianna & Shabalina, Ekaterina, 2021. "Dynamic Labor Reallocation with Heterogeneous Skills and Uninsured Idiosyncratic Risk," IZA Discussion Papers 14794, Institute of Labor Economics (IZA).
    10. Jaimovich, Nir & Saporta-Eksten, Itay & Siu, Henry & Yedid-Levi, Yaniv, 2021. "The macroeconomics of automation: Data, theory, and policy analysis," Journal of Monetary Economics, Elsevier, vol. 122(C), pages 1-16.
    11. ADACHI Daisuke, 2024. "Robots and Wage Polarization: The effects of robot capital by occupation," Discussion papers 24066, Research Institute of Economy, Trade and Industry (RIETI).
    12. Alessandra Bonfiglioli & Rosario Crinò & Harald Fadinger & Gino Gancia, 2020. "Robot Imports and Firm-Level Outcomes," CRC TR 224 Discussion Paper Series crctr224_2020_243, University of Bonn and University of Mannheim, Germany.
    13. Xu, Shaofeng & Liu, Tao & Liu, Fengliang, 2024. "On the role of automation in an epidemic," Journal of Economic Dynamics and Control, Elsevier, vol. 160(C).
    14. Noritaka Kudoh & Hiroaki Miyamoto, 2021. "Robots and Unemployment," Working Papers SDES-2021-5, Kochi University of Technology, School of Economics and Management, revised May 2021.
    15. Daniel Aaronson & Brian J. Phelan, 2020. "The Evolution of Technological Substitution in Low-Wage Labor Markets," Working Paper Series WP-2020-16, Federal Reserve Bank of Chicago, revised 01 Mar 2022.
    16. Cortes, Guido Matias & Jaimovich, Nir & Nekarda, Christopher J. & Siu, Henry E., 2020. "The dynamics of disappearing routine jobs: A flows approach," Labour Economics, Elsevier, vol. 65(C).
    17. Pablo Casas & José L. Torres, 2024. "Government size and automation," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 31(3), pages 780-807, June.
    18. Guimarães, Luís & Mazeda Gil, Pedro, 2022. "Looking ahead at the effects of automation in an economy with matching frictions," Journal of Economic Dynamics and Control, Elsevier, vol. 144(C).
    19. Xiangyu Feng & Nir Jaimovich & Krishna Rao & Stephen J Terry & Nicolas Vincent, 2023. "Location, Location, Location: Manufacturing and House Price Growth," The Economic Journal, Royal Economic Society, vol. 133(653), pages 2055-2067.
    20. Nakatani, Ryota, 2024. "Optimal Taxation in the Automated Era," MPRA Paper 121347, University Library of Munich, Germany.
    21. Arthur Jacobs & Elsy Verhofstadt & Luc Van Ootegem, 2023. "Are more automatable jobs less satisfying?," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 23/1059, Ghent University, Faculty of Economics and Business Administration.
    22. Arvai, Kai & Mann, Katja, 2022. "Consumption Inequality in the Digital Age," VfS Annual Conference 2022 (Basel): Big Data in Economics 264001, Verein für Socialpolitik / German Economic Association.
    23. Wacks, Johannes, 2021. "Labor Market Polarization with Hand-to-Mouth Households," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242391, Verein für Socialpolitik / German Economic Association.
    24. Nakatani, Ryota, 2022. "Optimal fiscal policy in the automated economy," MPRA Paper 115003, University Library of Munich, Germany.
    25. ARAI Kosuke & FUJIWARA Ippei & SHIROTA Toyoichiro, 2021. "Robot Penetration and Task Changes," Discussion papers 21093, Research Institute of Economy, Trade and Industry (RIETI).

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    More about this item

    Keywords

    Polarization; Automation; Routine employment; Labor force participation; Universal basic income; Unemployment insurance; Retraining;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • 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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