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New Technologies and the Labor Market

Paper Session

Friday, Jan. 6, 2017 7:30 PM – 9:30 PM

Hyatt Regency Chicago, Crystal B
Hosted By: American Economic Association
  • Chair: Daron Acemoglu, Massachusetts Institute of Technology and NBER

Is Modern Technology Responsible for Jobless Recoveries?

Georg Graetz
,
Uppsala University
Guy Michaels
,
London School of Economics and Political Science

Abstract

Since the early 1990s, recoveries from recessions in the US have been plagued by weak employment growth. One possible explanation for these "jobless" recoveries is rooted in technological change: middle-skill jobs, often involving routine tasks, are lost during recessions, and the displaced workers take time to transition into other jobs (Jaimovich and Siu, 2014). But technological replacement of middle-skill workers is not unique to the US—it also takes place in other developed countries (Goos, Manning, and Salomons, 2014). So if jobless recoveries in the US are due to technology, we might expect to also see them elsewhere in the developed world. We test this possibility using data on recoveries from 71 recessions in 28 industries and 17 countries from 1970-2011. We find that after 1985, GDP recovered more slowly after recessions, but employment did not. Industries that used routine tasks more intensively experienced deeper recessions even before 1985, and this pattern did not worsen since. Finally, middle-skill jobs did not recover particularly slowly after recessions in industries that were more affected by technological change. Taken together, this evidence suggests that technology is not causing jobless recoveries in developed countries outside the US.

Demographics and Robots

Daron Acemoglu
,
Massachusetts Institute of Technology and NBER
Pascual Restrepo
,
Massachusetts Institute of Technology

Abstract

Models of the wreck of technological change link the development and adoption of technologies to changes in relative factor supplies and prices. One of the most major changes in factor supplies is underway due to the aging of the population of almost all advanced economies. We argue that this demographic transition generates a shortage of labor and should trigger the adoption of robots aimed at economizing on the expected increases in the cost of labor, especially the labor of young workers. We document that consistent with this hypothesis there is a strong cross-country correlation between adoption of reports and the aging of the population.

Concentrating on the Falling Labor Share

David Autor
,
Massachusetts Institute of Technology
David Dorn
,
University of Zurich and CEPR
Lawrence Katz
,
Harvard University
Christina Patterson
,
Massachusetts Institute of Technology
John Van Reenen
,
Massachusetts Institute of Technology

Abstract

Recent literature documents a substantial decline in labor’s share of value-added across numerous developed countries in recent decades, with the steepest falls occurring after the year 2000. But there is little consensus on the underlying causes or economic implications of this phenomenon. We provide detailed evidence and a simple conceptual model to interpret the fall in the labor share. Analyzing representative firm-level microdata, we document that the decline in the labor share is primarily a between- firm phenomenon, whereby large, capital intensive firms have increased their share of aggregate value-added. There is a rising correlation between firm market share and capital intensity in most sectors. Second, industry concentration, measured by firm market shares, has risen as well. Finally, industries that exhibited the greatest increases in concentration experienced the largest falls in labor share. We present a theory of ‘superstar firms’ where rising firm concentration and falling labor shares both stem from an increase in winner-take- all competition in product markets, possibly spurred by technological change, globalization, or deregulation.
JEL Classifications
  • D0 - General