DP15985 Who Produces the Robots?
|Author(s):||Hans Gersbach, Samuel Schmassmann|
|Publication Date:||March 2021|
|Keyword(s):||skills · technological change · task · complexity · wage inequality|
|Programme Areas:||Labour Economics, Macroeconomics and Growth, Organizational Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=15985|
To assess how disruptive automation and digitization could be, we develop a three-industry model involving routine and non-routine production of consumption goods or services, as well as capital good production. Workers exhibit different skill levels and only high-skilled workers can perform non-routine tasks in production. We compare an industrial economy in which the production of capital goods (machines) requires routine tasks with a future economy, the robotic economy, in which the production of capital goods (robots) requires non-routine tasks. We show that in an industrial economy, technological progress in capital production has an equalizing effect on wages and leads to integrated labor markets, whereas in a robotic economy, it can lead to a disintegration of labor markets, with falling real wages for low-skilled workers and increasing real wages for high-skilled workers.