Skip to main content
a tale of two workers
Report

The macroeconomics of automation: Data, theory, and policy analysis

, , , and
Editor's Note:

This paper was prepared for the December 12, 2019, conference on “Automation, Labor Market Institutions, and the Middle Class” for the Brookings Institution, Future of the Middle Class Initiative.

Abstract:

Progress in industrial robotics and information technologies has meant that advanced economies have experienced a significant drop in the fraction of the population employed in middle wage, “routine task-intensive”occupations. Applying machine learning techniques, we identify the types of individuals who would otherwise be employed in such occupations, if not for advances in automation technology, and track their labor market outcomes. Based on these findings, we develop a quantitative, heterogeneous agent, general equilibrium model of labor force participation, occupational choice, and capital investment to study the aggregate and distributional effects of advancing automation. We use this framework as a laboratory to evaluate various public policies aimed at addressing the disappearance of routine employment and its consequent impacts on inequality.

 

Henry Siu

Professor - Vancouver School of Economics, University of British Columbia

Faculty Research Fellow - NBER

Yaniv Yedid-Levi

Senior Lecturer in Economics - Interdisciplinary Center (IDC) Herzliya

The goal of the Future of the Middle Class Initiative is to improve the quality of life of America’s middle class and to increase the number of people rising to join its ranks. Through independent, non-partisan analysis and policy development, we seek to advance public understanding of challenges facing the middle class and barriers to upward mobility.

Get daily updates from Brookings