Mechanization, Task Assignment, and Inequality

Yuki, Kazuhiro (2021): Mechanization, Task Assignment, and Inequality.

Abstract

Mechanization (or automation) has proceeded continuously since the Industrial Revolution and seems to have accelerated recently due to the rapid advancement of information technology. This paper theoretically examines long-run trends of mechanization, shifts of tasks humans perform, and earnings levels and inequality. Specifically, the paper develops a Ricardian model of task assignment and analyzes how improvements of productivities of machines and an increase in the relative supply of skilled workers affect task assignment (which factor performs which task), earnings levels and inequality, and aggregate output. The model succeeds in capturing the great majority of the long-run trends. The paper also explores possible future trends of the variables when information technology continues to grow rapidly.

• Item Type: MPRA Paper
• Language: English
• Keywords: mechanization, automation, task assignment, earnings inequality, information technology
• Subjects: J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J24 - Human Capital ; Skills ; Occupational Choice ; Labor Productivity; J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure ; Wage Differentials; N - Economic History > N3 - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy > N30 - General, International, or Comparative; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O14 - Industrialization ; Manufacturing and Service Industries ; Choice of Technology; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O33 - Technological Change: Choices and Consequences ; Diffusion Processes

References

[1] Acemoglu, D. (2010), "When does Labor Scarcity Encourage Innovation?," Journal of Political Economy 118 (6), 1037-1078.

[2] Acemoglu, D. and D. Autor (2011), "Skills, Tasks and Technologies: Implications for Employment and Earnings," in O. Ashenfelter and D. Card, eds., Handbook of Labor Economics Volume IV, Part B, Amsterdam: Elsevier, Chapter 12, 1043-1171.

[3] Acemoglu, D. and P. Restrepo (2018), "The Race Between Man and Machine: Implications of Technology for Growth, Factor Shares and Employment," American Economic Review 108(6), 1488-542.

[4] Acemoglu, D. and F. Zilibotti (2001), "Productivity Differences," Quarterly Journal of Economics 116, 563-606.

[5] Aghion, Philippe, Benjamin F. Jones, and Charles I. Jones (2019), "Artificial Intelligence and Economic Growth," in A. Agrawal, J. Gans, and A. Goldfarb, eds., The Economics of Artificial Intelligence: An Agenda, Chicago: University of Chicago Press, 237-282.

[6] Alvaredo, F., A. B. Atkinson, T. Piketty, and E. Saez (2013), "The Top 1 Percent in International and Historical Perspective," Journal of Economic Perspectives 27(3), 3-20.

[7] Autor, D. (2015), "Why Are There Still So Many Jobs? The History and Future of Workplace Automation," Journal of Economic Perspectives 29(3), 3-30.

[8] Autor, D. (2019), "Work of the Past, Work of the Future," NBER Working Paper No. 25588.

[9] Autor, David, Claudia Goldin, and Lawrence Katz (2020), "Extending the Race between Education and Technology," AEA Papers and Proceedings 110, 347-51.

[10] Autor, D., F. Levy and R. Murnane (2002), "Upstairs, Downstairs: Computers and Skills on Two Floors of a Large Bank," Industrial and Labor Relations Review 55 (3), 432-447.

[11] Autor, D., F. Levy and R. Murnane (2003), "The Skill Content of Recent Technological Change: An Empirical Exploration," Quarterly Journal of Economics 116 (4).

[12] Bartel, A., C. Ichniowski, and K. Shaw (2007), "How Does Information Technology Affect Productivity? Plant-Level Comparisons of Product Innovation, Process Improvement, and Worker Skills," Quarterly Journal of Economics 122(4), 1721-1758.

[13] Beaudry, P., D. Green, and B. Sand (2016), "The Great Reversal in the Demand for Skill and Cognitive Tasks," Journal of Labor Economics 34(S1), S199-S247.

[14] Böhm, M. J. (2020), "The Price of Polarization: Estimating Task Prices under Routine-Biased Technical Change," Quantitative Economics 11, 761-799.

[15] Costinot, A. and J. Vogel (2010), "Matching and Inequality in the World Economy," Journal of Political Economy 118 (4), 747-786.

[16] Ebenstein, A., Harrison, A., McMillan, M. and Phillips, S. (2014), "Estimating the impact of trade and offshoring on American workers using the current population surveys," Review of Economics and Statistics 96(4), 581-95.

[17] Farber, Henry S., Daniel Herbst, Ilyana Kuziemko, and Suresh Naidu (2021), "Unions and Inequality over the Twentieth Century: New Evidence from Survey Data," forthcoming in Quarterly Journal of Economics.

[18] Feinstein, C. H. (1998), "Pessimism Perpetuated: Real Wages and the Standard of Living in Britain during and after the Industrial Revolution," Journal of Economic History 58(3), 625-658.

[19] Firpo, S., N. Fortin, and T. Lemieux (2013)," Occupational Tasks and Changes in the Wage Structure," mimeo, University of British Columbia.

[20] Givon, D. (2006), "Factor Replacement versus Factor Substitution, Mechanization and Asymptotic Harrod Neutrality," mimeo, Hebrew University.

[21] Garicano, L. and E. Rossi-Hansberg (2006), "Organization and Inequality in a Knowledge Economy," Quarterly Journal of Economics 121 (4), 1383-1435.

[22] Goldin, C. and L. Katz (2008), The Race between Education and Technology, Cambridge:Harvard University Press.

[23] Goos, M., A. Manning, and A. Salomons (2014), "Explaining Job Polarization: Routine-Biased Technological Change and Offshoring," American Economic Review 104(8), 2509-2526.

[24] Grossman, G. M. and E. Rossi-Hansberg (2008), "Trading Tasks: A Simple Theory of Offshoring," American Economic Review 98 (5), 1978-97.

[25] Grossman, G. M., E. Helpman, and P. Kircher (2017), "Matching, Sorting, and the Distributional Effects of International Trade," Journal of Political Economy 125 (1), 224-264.

[26] Hémous, David and Morten Olsen (2020), "The Rise of the Machines: Automation, Horizontal Innovation and Income Inequality," forthcoming in American Economic Journal: Macroeconomics.

[27] Katz, L. and R. Margo (2013), "Technical Change and the Relative Demand for Skilled Labor: The United States in Historical Perspective," NBER Working Paper No. 18752.

[28] Landes, D. (2003), The Unbound Prometheus: Technical Change and Industrial Development in Western Europe from 1750 to the Present (2nd ed.), New York: Cambridge University Press.

[29] Mokyr, J. ed. (1985), The Economics of the Industrial Revolution, Totowa, N.J.: Rowman and Allanheld.

[30] Mokyr, J. (1999), "The Second Industrial Revolution, 1870-1914" in V. Castronovo, ed., Storia delleconomia Mondiale, Rome: Laterza Publishing, pp. 219-245.

[31] Naticchioni, P., Massari, R., and G. Ragusa (2014)," Unconditional and Conditional Wage Polarization in Europe," IZA Discussion Paper No. 8465.

[32] OECD (2008), Growing Unequal? Income Distribution and Poverty in OECD Countries, Paris: OECD.

[33] Peretto, P. and J. Seater (2013), "Factor-Eliminating Technical Change," Journal of Monetary Economics 60(4), 459-473.

[34] Ray, Debraj and Dilip Mookherjee (2020), "Growth, Automation, and the Long-Run Share of Labor," mimeo, New York University and Boston University.

[35] Sampson, T. (2016), "Assignment Reversals: Trade, Skill Allocation and Wage Inequality," Journal of Economic Theory 163, 365-409.

[36] Sattinger, M. (1993), "Assignment Models of the Distribution of Earnings," Journal of Economic Literature 31, 831-80.

[37] Zeira, J. (1998), "Workers, Machines, and Economic Growth," Quarterly Journal of Economics 113, 1091-1117.

[38] Zeira, J. (2010), "Machines as Engines of Growth," mimeo, Hebrew University.

[39] Zuleta, H. (2008), "Factor Saving Innovations and Factors Income Shares," Review of Economic Dynamics 11, 836-851.