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Speech
Hanging a Question Mark
Fed?s Harker Speaks at Management Science?s 65th Anniversary Conference. Philadelphia Fed President Patrick T. Harker gave remarks focusing on technology, automation, and the importance of human insight at Management Science?s 65th Anniversary Conference in Boston. ?In my experience, you run into trouble when you start thinking your model can do all the work,? he said.
Discussion Paper
Automation and the Future of Work
There are numerous reports that highlight potential effects that new technology will have on the U.S. labor market, and many of them are not exactly what you would expect. For example, with the advent of the internet and ubiquity of spreadsheets in the 1980s, analyst employment soared. The new technology unlocked latent demand for more analysis that had been simply too expensive before the new communication and productivity technologies became common. The need for more analysis led to more analysts…even though there were new technologies that made the work more efficient or productive.
Working Paper
Occupation Mobility, Human Capital and the Aggregate Consequences of Task-Biased Innovations
We construct a dynamic general equilibrium model with occupation mobility, human capital accumulation and endogenous assignment of workers to tasks to quantitatively assess the aggregate impact of automation and other task-biased technological innovations. We extend recent quantitative general equilibrium Roy models to a setting with dynamic occupational choices and human capital accumulation. We provide a set of conditions for the problem of workers to be written in recursive form and provide a sharp characterization for the optimal mobility of individual workers and for the aggregate supply ...
Newsletter
Automation and the Minimum Wage
This issue explains how a higher mandated minimum wage may lead some firms to substitute capital for labor, likely reducing job opportunities.
Race and the Threat of Job Loss from Automation
Kristen Broady, fellow at Brookings Metro, discusses the vulnerability of Black and Hispanic workers to automation.
Working Paper
Can Pandemic-Induced Job Uncertainty Stimulate Automation?
The COVID-19 pandemic has raised concerns about the future of work. The pandemic may become recurrent, necessitating repeated adoptions of social distancing measures (voluntary or mandatory), creating substantial uncertainty about worker productivity. But robots are not susceptible to the virus. Thus, pandemic-induced job uncertainty may boost the incentive for automation. However, elevated uncertainty also reduces aggregate demand and reduces the value of new investment in automation. We assess the importance of automation in driving business cycle dynamics following an increase in job ...
Working Paper
Digital Adoption, Automation, and Labor Markets in Developing and Emerging Economies
We document a strong negative link between self-employment and the rate of digital adoption by firms in developing and emerging economies. No link between digital adoption and the unemployment rate is found, however. To explain this evidence, we build a general equilibrium search-and-matching model with endogenous labor force participation, self-employment, endogenous firm entry, and information-and-communications technology adoption. The main finding is that changes in the cost of technology adoption per se cannot rationalize the evidence. Instead, changes in firms' barriers to entry ...
Journal Article
Workers' Shrinking Share of the Pie
Features: {{p}} Economists have advanced a wide variety of explanations for why workers' share of overall income has been going down
Working Paper
Understanding Growth Through Automation: The Neoclassical Perspective
We study how advancements in automation technology affect the division of aggregate income between capital and labor in the context of long-run growth. Our analysis focuses on the fundamental trade-off between the labor-displacing effect of automation and its positive productivity effect in an elementary task-based framework featuring a schedule of automation prices across tasks linked to the state of technology. We obtain general conditions for the automation technology and technical change driving automation to be labor-share displacing. We identify a unique task technology that reconciles ...
Working Paper
Automation, Bargaining Power, and Labor Market Fluctuations
We argue that the threat of automation weakens workers' bargaining power in wage negotiations, dampening wage adjustments and amplifying unemployment fluctuations. We make this argument based on a quantitative business cycle model with labor market search frictions, generalized to incorporate automation decisions and estimated to fit U.S. time series. In the model, procyclical automation threats create real wage rigidity that amplify labor market fluctuations. We find that this automation mechanism is quantitatively important for explaining the large volatilities of unemployment and vacancies ...