Robot Arithmetic: New Technology and Wages
American Economic Review: Insights
vol. 1,
no. 1, June 2019
(pp. 1-12)
Abstract
Existing economic models show how new technology can cause large changes in relative wages and inequality. But there are also claims, based largely on verbal expositions, that new technology can harm workers on average or even all workers. This paper shows—under plausible assumptions—that new technology is unlikely to cause wages for all workers to fall and will cause average wages to rise if the prices of investment goods fall relative to consumer goods (a condition supported by the data). We outline how results may change with different assumptions.Citation
Caselli, Francesco, and Alan Manning. 2019. "Robot Arithmetic: New Technology and Wages." American Economic Review: Insights, 1 (1): 1-12. DOI: 10.1257/aeri.20170036Additional Materials
JEL Classification
- D31 Personal Income, Wealth, and Their Distributions
- G31 Capital Budgeting; Fixed Investment and Inventory Studies; Capacity
- J22 Time Allocation and Labor Supply
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 Wage Level and Structure; Wage Differentials
- O31 Innovation and Invention: Processes and Incentives
- O33 Technological Change: Choices and Consequences; Diffusion Processes