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Stagnant wages in the face of rising labor productivity: The potential role of industrial robots

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  • Prettner, Klaus

Abstract

Over the past decades, labor productivity and per capita GDP have increased steadily, while real wages for most workers have remained stagnant. This challenges conventional economic wisdom according to which the remuneration of a production factor is determined by its productivity. Considering industrial robots as a substitute for workers allows reconciling the two trends. Industrial robot use reduces the marginal product of labor, whereas it raises output per hour worked. Using data for the United States, we show that a sizable part of the observed wedge between wages and labor productivity can be explained using such a framework.

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  • Prettner, Klaus, 2023. "Stagnant wages in the face of rising labor productivity: The potential role of industrial robots," Finance Research Letters, Elsevier, vol. 58(PD).
    • Handle: RePEc:eee:finlet:v:58:y:2023:i:pd:s1544612323010590
    DOI: 10.1016/j.frl.2023.104687
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    Cited by:

    1. David E. Bloom & Klaus Prettner & Jamel Saadaoui & Mario Veruete, 2023. "Artificial intelligence and the skill premium," Department of Economics Working Papers wuwp353, Vienna University of Economics and Business, Department of Economics.

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    More about this item

    Keywords

    Automation; Productivity; Wage growth; Inequality;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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