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Title: Automation, Growth and Factor Shares

Citation Type: Miscellaneous

Publication Year: 2018

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Abstract: Labor's share of income in the United States has trended downward over the last 30 years. This paper develops a model that links automation to the labor share and pro- vides evidence on the extent to which the fall was due to automation. In the model, production requires completing a set of tasks that can be performed by either labor or capital. Aggregating over rms that operate capital with di ering degrees of au- tomation, total output of the economy can be represented as a Constant Elasticity of Substitution (CES) function with total factor productivity and share parameter (α) determined by the distribution of automation technology across rms. Using industry- level data, including a novel measure of aggregate task inputs into production, I nd evidence that automation was a signi cant driving force of the US labor share between 1972-2010. The proposed model of the aggregate production function can reconcile three important empirical ndings on US production and growth that the canonical CES model cannot: declining labor shares, aggregate capital-labor complementarity, and capital-biased technical progress.

Url: https://pdfs.semanticscholar.org/f599/0c24b1b1919109f875ffd3b6769691457641.pdf

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Authors: Martinez, Joseba

Publisher: New York University

Data Collections: IPUMS USA

Topics: Labor Force and Occupational Structure

Countries: United States