Full Citation

Title: Technology Adoption by Firms and Distribution of Factor Income

Citation Type: Miscellaneous

Publication Year: 2022

ISBN:

ISSN:

DOI:

NSFID:

PMCID:

PMID:

Abstract: This paper examines how a decrease in capital costs affects factor income distribution through its varied impact across firms. Using a directed search model with convex vacancy posting costs, I explore how firms manage vacancy expenses by either raising wages to improve hiring rates or increasing automation to reduce labor needs. The model shows that more productive firms tend to automate more, and as capital prices fall, automation rises, leading to a lower labor share, a higher wage premium for non-routine workers, and increased residual wage dispersion. Quantitatively, the model suggests that the aggregate decrease in labor share is balanced by an increase in capital share, resulting in a net seven percentage point decline. Additionally, unemployment risk creates inefficiencies, which can be mitigated through progressive taxation and capital subsidies, enhancing the welfare of the new generation.

Url: https://omerfarukkoru.com/Papers/aut_directed.pdf

User Submitted?: No

Authors: Koru, Ömer Faruk

Publisher:

Data Collections: IPUMS CPS

Topics: Labor Force and Occupational Structure

Countries: