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

69 Pages Posted: 28 Jan 2020

See all articles by Nir Jaimovich

Nir Jaimovich

University of Zurich

Itay Saporta Eksten

Tel Aviv University - Eitan Berglas School of Economics

Henry Siu

University of British Columbia (UBC) - Vancouver School of Economics

Yaniv Yedid-Levi

Tiomkin School of Economics, IDC Herzliya

Multiple version iconThere are 4 versions of this paper

Abstract

The U.S. economy has experienced a significant drop in the fraction of the population employed in middle wage, "routine task-intensive" occupations. Applying machine learning techniques, we identify characteristics of those who used to be employed in such occupations and show they are now less likely to work in routine occupations. Instead, they are either non-participants in the labor force or working at occupations that tend to occupy the bottom of the wage distribution. We then develop a quantitative, heterogeneous agent, general equilibrium model of labor force participation, occupational choice, and capital investment. This allows us to quantify the role of advancement in automation technology in accounting for these labor market changes. We then use this framework as a laboratory to evaluate various public policies aimed at addressing the disappearance of routine employment and its consequent impacts on inequality.

Keywords: polarization, automation, routine employment, labor force participation, universal basic income, unemployment insurance, retraining

JEL Classification: E22, E24, J23, J24

Suggested Citation

Jaimovich, Nir and Saporta Eksten, Itay and Siu, Henry and yedid-levi, yaniv, The Macroeconomics of Automation: Data, Theory, and Policy Analysis. IZA Discussion Paper No. 12913, Available at SSRN: https://ssrn.com/abstract=3525241 or http://dx.doi.org/10.2139/ssrn.3525241

Nir Jaimovich (Contact Author)

University of Zurich ( email )

Itay Saporta Eksten

Tel Aviv University - Eitan Berglas School of Economics ( email )

P.O. Box 39040
Ramat Aviv, Tel Aviv, 69978
Israel

HOME PAGE: http://www.tau.ac.il/~itaysap/

Henry Siu

University of British Columbia (UBC) - Vancouver School of Economics ( email )

6000 Iona Dr
Vancouver, BC V6T 1L4
Canada

Yaniv Yedid-levi

Tiomkin School of Economics, IDC Herzliya ( email )

P.O. Box 167
Herzliya, 4610101
Israel

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