DP12974 Automation and Unemployment: Help is on the Way

Author(s): Hideki Nakamura, Joseph Zeira
Publication Date: June 2018
Date Revised: July 2018
Keyword(s): automation, growth, Labor Income Share, technical change, unemployment
JEL(s): J64, O14, O30, O40
Programme Areas: Macroeconomics and Growth
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=12974

This paper presents a model of technical change that combines two lines of research together. It is a task based model, in which automation turns labor tasks to mechanized ones, and there is also a continuous addition of new labor tasks, as in the expanding variety literature. We impose three simple restrictions on the model. The first is that all new tasks are adopted. The second is that all new automation innovations are adopted and the third is that the share of labor does not converge to zero in the long run. We show that these restrictions imply that unemployment due to automation is expected to converge to zero over time.