On the Welfare Implications of Automation

Abstract

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Accounting for Factorless Income

“…This deviation, or what we call factorless income, could reflect economic 49 In a model with a single investment good, Karabarbounis and Neiman (2014) argued that the decline in the aggregate price of investment goods led to a decline in the labor share of roughly 2.5 percentage points. Our results here with multiple types of capital are broadly consistent with Eden and Gaggl (2018) who estimate a production function with IT and non-IT capital and argue that the decline in the relative price of IT accounts for roughly half of the decline in the U.S. labor share. Recent work by Autor and Salomons (2018) presents evidence across countries and industries that relates productivity-enhancing technological advances (potentially caused by the adoption of industrial robots and patenting flows) to declines in the labor share after the 1980s.…”

“…The economy is 33 Greenwood, Hercowitz, and Krusell (1997) consider the macroeconomic effects of investment-specific technical change in a model that differentiates between equipment and structures. Related recent work with heterogeneous capital stocks includes Eden and Gaggl (2018) who consider a model with two types of capital and Rognlie (2015) who considers multiple types of productive capital and housing. small in the sense that it treats the path of the real interest rate as exogenous.…”

The Aggregate and Distributional Effects of Financial Globalization: Evidence from Macro and Sectoral Data

“…3 The third is on the drivers of the labor share. This literature has focused on the roles of technological progress in equipment goods and implied substitution of capital for routine labor tasks (Karabarbounis and Neiman, 2014;Alvarez-Cuadrado, Long and Poschke 2015;Eden and Gaggl 2015;Acemoglu and Restrepo 2016;Dao et al 2017), rising concentration and pricing power across markets (Autor et al 2017;Barkai 2017), globalization of trade and production (Elsby, Hobijn, and Sahin 2013;Boehm, Flaaen, and Pandalai-Nayar 2017;Dao et al 2017), measurement issues (Rognlie 2015;Koh, Santaeulalia-Llopis, and Zheng 2016;Bridgman 2017), and labor market institutions (Bentolila and Saint-Paul 2003;Ciminelli, Duval, and Furceri 2018), but much less so on the role of capital account liberalization.…”

Towards Industry 4.0: A Roadmap for the South African Heavy Industry Sector

“…Negative factors are present, however. The advent of the third industrial revolution resulted in a decline in the manual labour workforce, with many tasks being reserved for automation [11].…”